|
In August, 1971, the
US abandoned the gold standard. Overnight the US dollar was disconnected
from the value of gold. The US dollar was no longer backed by, or
convertible into gold. |
|
At the moment the US
disconnected its currency from gold's value, it initiated a grand
experiment. The laboratory was the US economy. The experiment was to
resolve the question which some who fail to understand the experimental
nature of economics still rage over today. That experiment is denoted by
the question, "Can a global economy operate and continue to grow when
its currency is not backed by any more than the issuing government's
credibility and the users' faith in that government's credit?". |
|
|
The experiment
initiated in 1971 set off the low growth, rampant inflation of the
1970s. This was followed by the government forcing 20+% interest rates
in the early 1980s, purporting to quell inflation. That was followed by
asset inflation of the later 1980s and 1990s. These were particularly
powerfully displayed in stocks and real estate, with intermittently
inflating and deflating commodity bubbles. During the early 2000s, asset
bubbles in real estate and stocks burst and were re-inflated through
manipulations of the US Federal Reserve. |
|
|
Following several
decades of Federal Reserve manipulation with resulting market
disruptions including the politicization and social impact of
legislation distorting real estate investment and ownership and labor
valuations, further maintenance of the laboratory experiment became
impossible. Without the gold standard of valuation -- without any
standard of valuation other than the so-called "full faith and credit of
the US government -- the valuation system of trust could only fluctuate
and implode. Implosion and loss of faith in markets naturally followed.
In this experiment there was no substantive backing such as that
provided by gold. In 2007, labor and asset valuations weakened and began
to float within a declining trend. |
|
Valuations of real
estate, stocks, commodities, and labor now float within insecure,
chaotic markets that are frequently annoyed and disrupted by political
posturing, threats to the efficacy of capitalism, and by incompetent,
vacuous political place-holder leadership. |
|
The laboratory wherein
resides the US economy will recover its growth trajectory when the US
gains worthy leadership and when Americans know that they will be left
to their own skills and merits to achieve or fail. |
|
Please add your comments
below. They may be included on this site. |
|
|
|
|