By studying the history of the dollar, or ""greenback,"" as it was known during the Civil War, one may comprehend the seriousness of the country's financial situation. During the American Civil War, the United States issued legal cash that had a green print on one side. This currency is referred to as a ""greenback."" Gold was used to support currency at the time, but when the Civil War started, the need for additional money outpaced the country's gold supplies. The Greenback was introduced by President Lincoln, who did this by basing its support only on the legitimacy of the American government. similar to how it is now. The Civil War and the ensuing first industrial revolution were mainly made possible by those Greenbacks of yesteryear.
Currently, the US dollar is perilously near to losing its status as the world's reserve currency. The major reason is that our currency is still only supported by the trust of our government. The US government continues to receive interest-bearing loans from the Federal Reserve while it continues to print new ""Greenbacks."" At the expense of the US economy, interest is what enriches Wall Street and the Federal Reserve. Consider the Quantitative Easing the Fed implemented in the wake of the 2008 financial crisis. Main Street is still in dire financial straits, and all that did was enrich the power brokers.
Lincoln was already aware when he took office that the North's resources would have a significant impact on how the war turned out. Lincoln was also aware of how crucial it was to raise enough money for the war effort. In light of this, Lincoln proposed Salmon P. Chase as Secretary of the Treasury the day after his inauguration. Lincoln gave Secretary Chase sole authority to make decisions on the nation's finances. Chase, like the majority of others at the time, grossly overestimated the length and expense of the War.
The Lincoln Administration requested loans from New York bankers, the majority of whom were fronts for or connected to European financiers, in order to cover the costs of the war. President Lincoln refused to accept the terms of the loans due to the extremely high interest rates of 24 to 36 percent and urged for alternative options. Illinois colonel Edmund D. Taylor proposed that the US government might print its own money. It is reported that Taylor said: ""Just get Congress to enact a bill enabling the issuance of full legal tender treasury notes and pay your warriors with them and go ahead and win your war with them as well. They will have full government approval and be just as good as any money if you make them fully legal tender."" Congress has the specific authority granted by the Constitution to produce legal money through the Treasury Department. We must also keep in mind that the Federal Reserve did not exist until 1913 and that this was during a period of war.
Lincoln did not initially come up with the notion to print Greenbacks based on the legitimacy of the government, but as pressure mounted on Congress to approve the proposal, the President quickly gave his support. The government had two options: it either issue its own currency or let European banks force the nation into an endless cycle of debt. The first Legal Tender Act, which permitted the issuance of $150 million in Treasury notes, was passed by Congress on February 25, 1862. Green ink is only used on one side of the print. The bills quickly earned the nickname ""greenbacks."" These United States Notes, sometimes known as ""greenbacks,"" served as receipts for labor and goods that were transported to the country. They might be exchanged in the neighborhood for items or services of equal value. The union used this money to support the war effort and maintain a stable economy. At least two different kinds of notes have been referred to as greenbacks. United States Notes and the Demand Note were the names given to them.
Abraham Lincoln demonstrated that the US government could print its own money, as opposed to the great banks, which wanted to profit handsomely from the government's borrowing of billions of dollars at interest to finance the American Civil War. Lincoln was aware of the risks associated with giving the government a loan on currency at a high interest rate, as demonstrated by the Greenback. He was aware that the United States would incur greater debt due to the interest rates on loans. If that sounds familiar, it should be since the Federal Reserve is currently ramping up this country's debt in exactly the same way.
Jackson, Lincoln, Garfield, and Kennedy were all aware of the risks associated with high-interest loans to the government, which are the true source of the nation's debt. A debt that will just keep growing and distance this nation's ability to prosper from becoming a reality. In other words, the financial and economic stability of the United States remains in grave danger. Today, it is also important to note that this nations debt and without the gold standard in play is the main reason why disposable incomes are at all time lows.
After the battle of Gettysburg Congress repealed the Legal Tender Act and restored the previous gold and silver backed currency loaned by major Banks with interest to the US government. It was the influence of the banks that swayed congress to repeal the Legal Tender Act. And, just like the Rothschilde's who controlled the Bank of England have now gained control of much of the United States financial policies. Today, it is the Federal Reserve and Wall Street financiers that control the monetary policies of the US and to a great deal too many members of Congress as well.
With the understanding of our banking system we come away with the realization that Americans future is tied to the debt of this nation. A debt that only continues to grow. With past and current wars around the world along the present Administration total ignorance of the financial crisis we are in has put this nation's future very much at risk. It could be arguably said that when President Nixon took the dollar off of the gold standard in 1972 was the financial blunder and is like a death sentence of the US dollar.
On August 15th was the 47th anniversary of President Nixon's financial blunder. The blunder that severed the final link between the dollar and gold. It has been said that no other single action by Nixon had a more profound and irreparable effect on the American people. Up until that time a dollar was worth 1/35th of an ounce of gold. When Nixon took us off the gold standard was the beginning of the worst 47 years in American economic history. And it looks that the next 40 years will be a continuation of the first 47 years.
What Nixon did was promise by taking this action, the requirement of maintaining the dollar's value in terms of gold would empower the Federal Reserve to use monetary policy to increase the general prosperity of the American people. We were also promised that the manipulation of quantity and value of a dollar would avoid costly recessions, provide high employment and produce economic growth. On the international level we were also promised that the devaluation of the dollar would reduce our trade deficit and improve the overall economy.
Since 1972 we have suffered numerous recessions and the worst financial disaster since the Great Depression. Our unemployment rates have fluctuated from a high of over 15% to now around 5.5%. The sad reality though wages have plummeted in relation to the cost of living. Our economic performance since 1972 has been dismal compared to the economic boom we had following World War II up until 1972.
Economic growth has averaged just under 3% for the past 47 years. Had the gold standard survived our economic growth would have risen to over 4% or even higher. We have to point out that 4% economic growth rate always yields higher employment and higher wages. A 3% growth rate only maintains the status-quo and a $8.5 trillion smaller economy. All this means that had Nixon kept the gold standard medium family incomes would be 50% higher today, or about equivalent to around $75,000 annually.
This also means that the tax base for all federal, state and local governments would not be experiencing the budget shortfalls that are currently plaguing every budget across the country. The fiscal challenges we currently are facing would be negated and our economic future would be allot more stable and secure. It has been for the past 47 years that the dollar has fallen in value by more than 75% and we still have over $400 billion trade deficit.
When we look back prior to 1972 a dollar then only goes as far as $.20 today. And, with little reason to believe that the dollar will maintain even this paltry value, the average American family is left with no meaningful way to save for their children's education or their own retirement. Millions of Americans today are faced with financial insecurity and little hope that their economic fortunes will turn around.
Having a gold standard is necessary for maintaining the buying power of the dollar. From 1948 to 1967 inflation was less than 2%. Interest rates were low averaging less than 4% which provided a reasonable cost to borrowers and a fair return to savers. Today, inflation rates keep rising every year. It is also interesting to note that had the dollar kept it's value to 1/35th of an ounce of gold a barrel of oil would sell for less than $2.50. The whole notion of the energy crisis and the more intrusive government regulation dictating usage are based on the illusion that the price of oil has gone up more than 30 times when in fact it is the dollar whose value has fallen relative to gold, oil, and all other goods and services over the past 47 years.
The United States has suffered a most debilitating economic and financial crisis since 1972. The deviation from a sound dollar today can and must be corrected if we are ever to regain the economic growth and prosperity similar to what this nation experience for the 30 years prior to 1972. Many of the baby boomer generation have recollections of how their parents handled financial affairs. Disposable incomes were plentiful and that dollar went so much farther than it does today all because the dollar was backed up by gold.
A much different set of circumstances exist today. More sober, more unsettling, and even a more sinister approach has taken over the majority of families spending habits has arisen. The greenback is not worth what it was compared to back in the early 1960's. To restore the value of the dollar and reestablish it's true worth is to have the gold standard reinstated whereby every fiscal transaction is geared to insure that more disposable incomes are available for all. The surest way is to like Lincoln did is to have the Treasury and not the Bank of New York or today's Federal Reserve print those all important greenbacks, interest free.
To this day having the Federal Reserve solely responsible for printing this nations currency and not the Treasury Department as stated in our Constitution with the gold standard not backing up our currency the American people are held hostage by this nations debt with all the accrued interest each and every one of us has to pay. Consequently the Greenback dollar will only continue to keep Americans disposable incomes from increasing. what is urgently needed is to put the Treasury Department in charge of our currency interest free and not the Federal Reserve where the interest rates for all the dollars loaned back to the US government has only crippled the United States financial and economically."""