Over several decades, money-printing and globalization have fundamentally transformed the United States:
• America had balanced trade accounts and trade surpluses from 1900 to 1971.
• But in 45 of the last 47 years, the U.S. has racked up mind-numbing trade deficits.
America’s transformation is an economic catastrophe:
• Before globalization, the U.S.A. was a manufacturing dynamo and the greatest creditor-nation of all time.
• Today, the United States is the greatest debtor-nation in the history of the world. America is now dependent on foreign countries for most manufactured products.
WHEN THE DOLLAR WAS A DOLLAR.
Until 1971, paper dollars were “as good as gold.” The dollar was 100% convertible to gold in foreign exchange (1792-1971). Before the dollar’s tie to gold was severed, money-printing was constrained by the physical supply of gold and silver.*
The dollar had tremendous purchasing-power when all Americans owned silver and/or gold coins. Before the dollar was first devalued (1933), people could exchange a $1 paper bill for a $1 gold coin and a $20 bill for a $20 Gold Piece (It now takes 65 times more dollars to buy the same $20 coin below).
THRIFT • SAVINGS • SOUND MONEY
Over three centuries, the virtue of thrift had become deeply ingrained in the American psyche. Just about everyone quoted the following proverbs:
“A penny saved is a penny earned.”
“Neither a borrower nor a lender be.”
“Never spend your money before you have it.”
“Look after the pennies and the dollars will look after themselves.”
Before the dollar was debauched, entrepreneurs and average Americans scrimped (pinched pennies) and saved for future enterprise:
“The prudent, penniless beginner in the world labors for wages awhile, saves a surplus with which to buy tools or land for himself… and at length hires another new beginner to help him.”**** ~Abraham Lincoln~
1971: UNLEASHING ECONOMIC DESTRUCTION
The frugal habits of Americans began to change after silver coins disappeared from circulation and the dollar was no longer backed by gold [Aug. 15, 1971]. Destructive forces were unleashed, just as Lord Keynes had warned:
“There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”** ~John Maynard Keynes~
As a result of the debauched currency, “the hidden forces of economic law” moved the nation in a new direction. Previous generations had created, saved, and invested their own capital to expand enterprises. After the dollar was debased, they began to rely less on private capital. Businessmen turned to banks, instead of saving for business expansion. Over time, the bank (debt) became the third party in most transactions.
From 1792 to 1971, the United States settled all trade imbalances with gold. Since 1971, U.S. trade deficits have been paid with borrowed money.
After the debasement of the dollar, debt began to play a new role in the lives of individuals. The savings rate declined; and Americans began using bank credit cards to fund consumption debt.
AMERICA 2018 – STATE OF THE UNION
Today, most Americans struggle with personal debt; and many cities and states have enormous, unfunded obligations. The nation is involved in two wars (plus covert-operations), and has 700+ military bases around the globe. The U.S. pays the bills with ‘money-printing;’ the Federal Reserve digitally creates credit by the $ trillions.
Only 10-11% of the workforce is involved with manufacturing. America now imports most manufactured goods, and exports mainly raw materials (coal, fertilizers, wheat, tobacco, meat, etc.). Today, public employees out-number manufacturing employees by 2 to 1. In a few years, 2/3 of the population will be government-dependent in some way.
BEFORE “FREE TRADE”
(United Nations-managed trade)
In the early days of the Republic, America’s Founders knew manufacturing would be the key to economic independence. (Before the American Revolution, colonists had mainly exported raw materials and imported manufactured goods.) Right from the beginning, leaders promoted trade with all nations and created trade policies that changed the nation.
Founders such as George Washington (Father of the country), James Madison (Father of the Constitution) and Alexander Hamilton (Secretary of the Treasury) introduced an American System of protection to domestic labor and industry. In 1789, the first Congress of the United States passed the “Tariff Act.”
Why did our forefathers establish protective tariffs on foreign merchandise and what were the results?
As a consequence of the legislation, Americans decided to produce the stuff themselves, rather than depend on foreigners and pay the import tax. The strategy created a production boom for ‘infant’ industries and businesses that competed with England. Throughout the land, competition was fierce to develop new and better products. Inter-state commerce sky-rocketed; and customers ended up paying less.
MANUFACTURING IS A WEALTH MULTIPLIER.
The export economy of the United States grew by leaps and bounds.
For the next 150 years, customs duties produced 50% to 90% of all federal revenues (no income tax until 1913).
From sea to shining sea, a powerful middle class developed because products were MADE IN THE U.S.A. Equipment was invented to save time, save work, and save money.
Tremendous wealth was created by manufacturing products using domestic raw materials. In no way did U.S. trade policies lead to isolationism. Before Free Trade (quotas, sanctions, favored nations), the U.S. traded with nations impartially. America supplied the lion’s share of domestic needs and exported high-quality MADE-IN-U.S.A. products to the world.
PROTECTIVE TARIFFS WORKED.
- Before globalization, America’s robust manufacturing-base supplied 40-42% of ALL manufactured products traded on the planet.
- Before Free Trade, the United States became the greatest creditor-nation of all time.
- Before the dollar was the “reserve currency,” our Treasury held title to more than 80% of officially-held gold reserves (more than 20,000 tons after World War II).
UNITED NATIONS • BRETTON WOODS
(the end of economic nationalism)
In 1944, the “United Nations Monetary and Financial Conference” convened at Bretton Woods, New Hampshire to establish the dollar as the world’s “reserve currency.” National currencies were un-pegged from gold, and pegged to the dollar. Conferees adopted a plan for a global monetary system:
In the new monetary system, national economies would become integrated and inter-dependent. International trade would be centrally managed within a framework of United Nations Governance by U.N. agencies such the World Court, World Bank, and the International Monetary Fund (IMF).
By the incremental loss of economic independence, nations would gradually lose national sovereignty (nationhood).
At the close of the conference, the U.S. Treasury Secretary (Henry Morgenthau, Jr.) said the establishment of the U.N. banking system marked the “end of economic nationalism.” And he was right.
UNITED NATIONS “MANAGED TRADE”
National economies were integrated in phases, beginning with the 1948 General Agreement on Tariffs & Trade (22,000-page GATT Treaty). America’s powerful manufacturing economy was gradually transformed to a consumption economy.***
America’s trade deficits began rising in the
1970s; and the nation has never looked back.
In 1994, the U.N. NAFTA Treaty (North American Free Trade Agreement) was “fast-tracked.” NAFTA signaled an exodus by local manufacturers to foreign lands. Why? No employee healthcare or retirement benefits, low taxes, fewer regulations, lower prices, lower quality, no unions (super-cheap labor). Millions of U.S. industrial jobs vanished.
In 1995, the General Agreement on Tariffs and Trade (GATT Treaty) was replaced by a sweeping U.N. Management System called the World Trade Organization (WTO).
The U.S. manufacturing exodus accelerated in the decade leading up to the 2008 crash. Almost 50,000 manufacturing plants (with 500 or more employees) moved operations off-shore. Domestic high-tech-manufacturing began to disappear.
Image courtesy of The Atlantic.
A CONSUMPTION ECONOMY IS A DYING ECONOMY.
Until credit froze worldwide on Aug. 9, 2007 and markets crashed in 2008, people enjoyed the illusion of growth and prosperity as a result of easy credit at low rates. The last ten years of Quantitative Easing (QE), 0% interest rates, and various government programs have helped to disguise the structural increase in unemployment:
More than 95 million Americans are no longer counted in the work-force; and an all-time-high number of young, eligible workers do not have jobs.
It is not an accident the U.S. has become economically dependent and indebted beyond belief. Lawmakers ignored the Constitution, debased the dollar, and hitched America’s wagon to U.N. Global Governance.
Free Trade agreements serve to destroy American sovereignty. According to the U.N.’s World Court, U.N. treaty authority trumps the authority of the U.S. Constitution/ Bill of Rights. Trade agreements (which govern much more than trade) have the force to over-rule U.S. law:
World Trade Organization [WTO] (Marrakesh Agreement, Uruguay Round, etc.); North American Free Trade Agreement [NAFTA]; Central America Free Trade Agreement[CAFTA]; Security and Prosperity Partnership of North America [SPP]; Trans-Pacific Partnership [TPP]; Korea Free Trade Agreement; Columbia Free Trade Agreement; Panama Free Trade Agreement; Transatlantic Trade and Investment Partnership [TTIP], [TISA], etc.
Closed-door negotiations by unelected bureaucrats are fast replacing open government by elected representatives. To regain U.S. independence, leaders must heed U.S. law. The House of Representatives alone has Constitutional authority to regulate commerce with foreign nations (Article II, Section 2; the Treaty Provision requires 2/3 Senate approval).
ESSENTIAL PRINCIPLES OF OUR GOVERNMENT
George Washington was America’s greatest statesman. He was unanimously elected President (two times); and chosen by the Founders to preside over the framing of the Constitution and Bill of Rights. In his famous “Farewell Address,” he warned leaders to “steer clear” of foreign alliances:
“The great rule of conduct for us in regard to foreign nations is in extending our commercial relations… our commercial policy should hold an equal and impartial hand… It is our true policy to steer clear of permanent alliance with any portion of the foreign world….” George Washington, “Farewell Address,” 1796.
Thomas Jefferson was America’s first Secretary of State, Vice President, and third President. When Jefferson outlined “the essential principles of our government,” he emphasized the danger of entangling, international alliances:
“…peace, commerce, and honest friendship with all nations – entangling alliances with none….” Thomas Jefferson, “Inaugural Address,” March 4, 1801.
Our forefathers enacted tariffs to protect domestic labor and industry. Today, our rich heritage is being squandered away. Un-American FREE TRADE is producing economic ruin:
- Wages are stagnant.
- The average person’s standard of living is falling.
- The United State’s preeminent position among the nations has slipped.
In Abraham Lincoln’s day, southern plantation-owners were the ‘Free-Traders.’ Lincoln rejected the idea that economic progress requires permanent, low-class workers (the rationale for slavery). He campaigned to boost protective tariffs.
“I… try to show, that the abandonment of the protective policy by the American Government… must produce want and ruin among our people.” Abraham Lincoln.****
To “Make America Great Again,” the Republic of the United States of America needs statesmen who understand “the essential principles of our government.” We fervently hope President Trump will continue to resist globalism.
Submitted by Denise Rhyne
* The U.S. Constitution was designed to preserve the Republic and the integrity of the dollar: “No State shall… make any thing but gold and silver coin a tender in payment of debts….” [Constitution, Article I, Section 10.]
In 1792, “The Coinage Act” under President Washington fixed the dollar to gold at $20 to 1 Troy oz.
** John Maynard Keynes, The Economic Consequences of the Peace, pp. 148-149, 235-236, (London: McMillan/ St. Martin’s Press for the Royal Economic Society, 1919, 1971).
*** U.S. CONSUMPTION ECONOMY/ Personal Consumption Expenditures (“PCE”): From 1998 through the third quarter of 2007, consumer spending (81.3%) plus government spending equaled 96% of the growth in GDP (Gross Domestic Product); U.S. exports plus business investment accounted for only 3% of GDP growth.
In the 25 years leading up to the 2008 debt-crisis, consumer spending (personal debt) accounted for 82.5% of real GDP growth. Each year, “PCE” grew 3.5%, continuously compounded. [William Emmons, January 2012, Federal Reserve Bank of St. Louis.]
**** The Collected Works of Abraham Lincoln, edited by Roy P. Basler, (1859 Address to the Wisconsin State Agricultural Society, Vol. III, pp. 478-479); (1846 Discussion of Protective Policy, Vol. I, p. 415); Rutgers University Press, New Brunswick, N.J., copyright 1953 Abraham Lincoln Assn.
FEDERAL RESERVE DOUBLE WHAMMY:
WHO WERE THE BANKERS AT BRETTON WOODS (see the first-ever list): http://www.youshouldbuygold.com/who-were-the-bankers-at-bretton-woods/