Currency today of the United States is the Federal Reserve Note or often referred to as United States Banknotes. The Federal Reserve Act of 1913 issued these “Notes” as legal tender with the words
this note is legal tender for all debts, public and private. These notes are issued to Federal Reserve Banks at the discretion of the Board of Governors of the Federal Reserve System. These notes are printed by the United States Bureau of Engraving and Printing and are backed by the financial assets that the Federal Reserve Banks pledge as collateral. This collateral is mainly Treasury securities and mortgage securities all purchased in the open market by mouse-clicked fiat money that is created out of thin air. Our present currency wasn’t always like this.
Before 1791 each bank issued its own notes
Before 1791 there was no centralized banking. Each commercial bank issued its notes. In fact, during the early years of the United States, the country operated without a central bank or a formal national currency, relying instead on a variety of state-chartered banks and a mixture of foreign and domestic currencies. The United States at this time operated under the Articles of Confederation (1781–1789) and later the Constitution (since 1789). Banking was primarily regulated at the state level. Each state had the authority to charter and regulate its banks, resulting in a diverse and often inconsistent banking landscape.
The First Bank of the United States appeared in 1791
In 1791 the responsibilities of a central bank appeared. The First Bank of the United States was created and produced its notes. It was the first central bank in the United States and played a crucial role in shaping the nation’s banking and financial system during its brief existence. The First Bank of the United States was chartered by Congress and signed into law by President George Washington on February 25, 1791. It was established for a 20-year period, with the option for renewal. The US Government was the largest shareholder in the bank, holding 20% of its capital. The remaining 80% of the bank’s capital was held by private investors, including foreign investors. The charter was not renewed in 1811.
In 1816 the Second Bank of the United States was formed
In 1816 the Second Bank of the United States was established but the charter was not continued in 1836 by President Andrew Jackson. The Second Bank of the United States was chartered by Congress and signed into law by President James Madison on April 10, 1816. It was established with a 20-year charter, similar to the First Bank. The primary reasons for creating the Second Bank of the United States were to address financial instability and the challenges faced during the War of 1812. The federal government needed a stable and reliable banking system to manage its finances, facilitate economic growth, and issue a uniform national currency.
The Free Banking Era ended in 1862 after many failures and panics
From 1837 to 1862 the US experienced the Free Banking Era. During this time there was no central bank, so banks issued their notes. Individual states had the authority to charter and regulate banks, resulting in a wide range of banking practices and note issuances. The Independent Treasury System, established in 1840, sought to separate the federal government from the banking system by requiring government funds to be held in government-owned vaults rather than in private banks. The Free Banking Era was marked by frequent bank failures and financial panics. The absence of a central bank and standardized regulations contributed to these crises.
The National Banking Act of 1863 established a system of national banks
From 1862 to 1913, a system of national banks was instituted by the 1863 National Banking Act. The National Banking Act of 1863 was a significant piece of legislation passed by the United States Congress during the American Civil War. It was signed into law by President Abraham Lincoln on February 25, 1863. The act was primarily designed to create a system of national banks and establish a uniform national currency.
The National Banking Act of 1863 established a more uniform national currency
The National Banking Act of 1863 was a significant piece of legislation passed by the United States Congress during the American Civil War. It was signed into law by President Abraham Lincoln on February 25, 1863. The act was primarily designed to create a system of national banks and establish a uniform national currency. US currency received a boost for sure in 1879 when the United States went on a gold standard. US currency was money during this period because it was backed by something tangible. Gold and silver certificates were commonplace.
The Federal Reserve Act of 1913 started to change our dollars into Federal Reserve Notes
The Federal Reserve Act of 1913 is a landmark piece of legislation in the United States that created the Federal Reserve System, the central banking system of the country. The act was signed into law by President Woodrow Wilson on December 23, 1913, and it fundamentally reformed the US banking and monetary system. Before its enactment, the US lacked a unified central bank, and banking functions were performed by various private banks, leading to frequent financial panics and economic instability. The Federal Reserve Note as we see it today is born, well almost. At this point, our money was still backed by some gold. Our paper money was redeemable into gold at any bank. The 1928 $100 bill stated right on there
One hundred dollars in gold coin payable to the bearer on demand.
1933 The United States devalues the Federal Reserve Note by Executive Order
President Franklin D. Roosevelt issued Executive Order 6102 in 1933, which required US citizens to turn in most of their gold coins, gold bullion, and gold certificates to the Federal Reserve in exchange for US dollars at the official price of $20.67 per ounce. This order effectively nationalized private gold holdings. This legislation followed Executive Order 6102 and further solidified the shift away from the gold standard. The Gold Reserve Act of 1934 raised the official price of gold to $35 per ounce, effectively devaluing the US dollar in terms of gold. It also prohibited private ownership of gold coins, gold bullion, and gold certificates. Money was now redeemable in
lawful money at the United States Treasury, or at any Federal Reserve Bank. There was no redemption of our money into gold after 1933 on a domestic level for US citizens.
$1 Silver certificates existed from 1878 to 1964
$1 Silver Certificates were a type of paper currency issued by the United States that was backed by and redeemable for silver. These certificates were in circulation from 1878 to 1964. The $1 Silver Certificates were typically smaller in size compared to other banknotes, and they featured various designs over the years. One of the most well-known designs featured the portrait of Martha Washington, the wife of George Washington, on the front of the note. In the early years of issuance, $1 Silver Certificates had a distinctive red seal on them, which led to their nickname red seal notes. Later issues had blue seals.
The US took all silver out of its money in 1965 with the Coinage Act of 1965
Under the Coinage Act of 1965, the silver content of dimes and quarters was eliminated, and these coins were instead made of a copper-nickel alloy. These coins are commonly referred to as clad coins. Silver dollars, such as the Peace Dollar and Morgan Dollar, had already been out of circulation for many years by 1965 and were not affected by this change. Dimes (pre-1965: 90% silver, 10% copper) became composed of 91.67% copper and 8.33% nickel. Quarters (pre-1965: 90% silver, 10% copper) also switched to the same copper-nickel composition.
While the Coinage Act of 1965 reduced the silver content in half-dollars, it didn’t eliminate it. Half-dollars minted from 1965 to 1970 were composed of 40% silver and 60% copper. The elimination of silver from circulating coins in 1965 completed the transition away from silver-backed currency in the United States. For example, a 1964 Kennedy half-dollar was 90% silver and has about $8 of silver in it based on today’s market. A 1978 Kennedy half-dollar was 0% fine silver and was 91.67% copper and 8.33% nickel and is worth about $.50. That’s a big difference between $8 and $.50.
The US went completely into fiat Federal Reserve Notes in 1971
While the United States had largely moved away from the gold standard in everyday domestic transactions and coinage by the early 1930s, the US dollar was still convertible to gold for international settlements under the Bretton Woods Agreement until 1971. President Nixon announced that the US would no longer exchange dollars held by foreign governments for gold. This suspended the dollar’s convertibility into gold. This meant that exchange rates were no longer fixed, and they could fluctuate based on supply and demand. They fluctuate based on central bank manipulation and stupidity, my opinion of course.
The total fiat currency experiment started officially in 1971. This is the same fiat experiment that is dying today. All paper currencies have been free to float against one another since 1971 and all have lost significant purchasing power compared to the only form of real money that has ever existed, which is physical gold. Our early money in this country was strong as it was backed by something tangible, today it is not. We can thank our wonderful central bankers and politicians for all of their greed and corruption. The fiat system kills purchasing power over time as more currency is created out of thin air. This exorbitant expansion of our money supply is one of the major causes of the financial storm that is quickly approaching. Exponential money creation is at the core of the risky financial system and the main reason for our lost purchasing power over the years with our current fiat money system.
The transition to a complete fiat monetary system in the United States and many other countries has brought about several advantages and benefits. Fiat systems can support economic growth by ensuring a stable and predictable monetary environment, which encourages investment and spending. A fiat currency allows for more straightforward international trade and exchange rate stability, making it easier for countries to engage in global commerce. Governments can more easily finance public expenditures through monetary policy tools and debt issuance, which can be essential for funding infrastructure, social programs, and public services.
Like any monetary system, the fiat system’s effectiveness depends on the responsible management of the currency, sound fiscal and monetary policies, and the confidence of the public and financial markets in the currency’s stability. We have not had responsible management of the currency, or sound fiscal and monetary policies. The confidence of the public and financial markets in the currency is waning. When the day comes that people can’t access their money at the bank or in the markets all hell is going to break loose. We already know it’s a guarantee that our currency will lose significant buying power over the next few decades. What’s the difference if it’s paper fiat currency or digital fiat currency? It is still fiat garbage. Well, I would suppose the privacy and control aspect is extremely important and relevant.
The US financial system is indeed characterized by money creation and debt. It is a fraudulent system but the results will be very real. The central bankers are criminals but they aren’t stupid. They are buying a lot of physical gold so they will have the chance to enter the next financial system once this one is torn down. They know the fiat system is nonsense. It doesn’t change the fact that central banks are hoarding more gold but pushing more paper fiat on their people.
The US people should know the fiat system is fraudulent and full of nonsense. Those who own gold and silver can distance themselves from the problems that the system has. Those who own gold and silver will hold the only form of real money that has ever existed in its original form. Precious metals will allow you to hedge your bets when it comes to bank and stock market assets and risk. Gold and silver will allow you to financially survive the financial storm that is quickly approaching. Just like the central banks that are hoarding more gold, you will be able to financially survive and enter the new financial system relatively intact. Those who don’t and let it all ride will more than likely be stuck in the system or possibly some of their assets may just disappear. A huge destruction of paper wealth is expected.
Several US states have passed legislation recognizing gold and silver as legal tender. These states sought to allow the use of precious metals as an alternative form of currency alongside the US dollar. This movement was driven by proponents of sound money and a return to some aspects of the gold and silver standards. These laws are typically passed at the state level and vary from state to state. Recognizing gold and silver as legal tender primarily addresses tax and regulatory issues. It does not necessarily mean that businesses or individuals will commonly use these metals for transactions. It does make sense to have a backup plan if our current financial system collapses like a house of cards. It’s always good and smart to have a backup plan when it comes to your money.