I’ve always wondered about this. It seems as if the time before the 1970s seemed like “golden years,” economically. But a lot has changed since then. We’re working harder and longer, for less. Many people are living paycheck to paycheck, not because of “irresponsibility” but because the cost of living is increasing faster and wages do not keep up. Neighborhoods were more stable if for no other reason than most people had stable employment and stayed in their homes longer; people did not move around like they do today.
What we didn’t realize back then was the die was cast for what we are dealing with today. Changes in banking and finance, monetary and trade policy occurred that put us on this economic collision course. The mushroom cloud has yet to form over the economy, but the countdown has begun.
“So, what happened in 1971? That's when the France and England asked for their US dollars to be redeemed by the US treasury for the agreed upon $35 per ounce, and were refused. At that time the US banks had created some 6 times the amount of paper money as they could redeem. President Nixon announced that the dollar would "float." At that time gold notes were no longer used within US borders and silver certificates were exchanged for Federal Reserve Notes in 1964, so 1971 was the last time the world used a currency with any redeemable backing. They call it a "faith based" currency now, probably because of the number of bank customers that can be found praying in bank lobbies.”
It used to be that for every dollar in circulation, there was an equivalent amount of gold backing that dollar. Not anymore. The saying “backed by the full faith and credit of the United States Government” sounds good, but it is not a tangible value that can be attached to each and every dollar. Here are some statistical observations:
“[US government] Borrowing, which accounted for only 5.3% of federal spending in the 1960s, increased to 29.9% in the 1990s." ... "Between 1977 and 1992, the average productivity of American workers increased by more than 30%, while the average real wage fell by 13%.”
To Have and To Have Not
by Michael Lund,
Harper's Magazine,
June 1995 Page 35
“By the late 1970s, there was a huge increase in the dollars floating around the world economy - the rate of growth in dollars between 1973 and 1980 was 20 times the growth in volume of trade.”
Adventures of the Dollar,
by Howard M. Wachtel, professor of economics
at the American University, Washington, DC
“"Much of what we now call growth or GDP is really just one of three things in disguise: fixing blunders from the past, borrowing resources from the future, or shifting functions from the traditional realm of household and community to the realm of the monetized economy. After rising somewhat between 1950 and the early 1970s, they said, the Genuine Progress Indicator (GPI) declined until in 1994 the GPI was 26% lower than it had been in 1973, and on a per capita basis it had fallen 42% since 1970!”
--Richard Stimson's "Playing with the Numbers"
citing the group "Redefining Progress,"
Clifford Cobb, Ted Halstead, and Jonathan Rowe,
Read more here:
http://ebean390.tripod.com/walt1971.html
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Friday, April 17th 2009 at 7:37PM
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