Why did the Federal Reserve Devalue the U.S. Dollar to 5 Cents?
The Federal Reserve took control over the United States money supply in 1913. Since then, the buying power of a dollar has decreased by 95% according to data from the Consumer Price Index (CPI). The Federal Reserve’s laissez faire attitude toward inflation has made the US dollar all but worthless.
In the early 1900’s prices looked a lot different than what they did today. Consider a typical restaurant. A drink of coffee, tea or milk at a restaurant could be had for just five cents. A main course meal of pork tenderloins, roast beef, pork and beans or chicken fricassee could be had for just twenty cents. For desert, a rhubarb apple pie, lemon layer cake or green apple pie could be had for just five cents. A family of four could eat a restaurant for just $1.50—and groceries were even cheaper.
Why have prices increased so dramatically in the last 100 years? We expect that prices naturally increase over time, but what if it didn’t have to be that way? What if instead of regular prices increases for a gallon of gasoline, a quart of milk or a meal at a restaurant went away? What if prices were so stable, that you could memorize the cost of most items at the grocery store?
The price increases (inflation) that you have seen as you have grown up are largely the result of the Federal Reserve mismanaging America’s currency. One of the Federal Reserve’s primary tasks is to minimize the level of inflation, but the inflation rate has increased dramatically since the Federal Reserve has taken over the money supply.
If the Federal Reserve’s job is to promote a healthy economy and to keep inflation at a manageable level, why has the U.S. economy grown at a slower rate since 1914 than it did before the Federal Reserve System was implemented? The price of goods have also increased at a much greater rate since the Federal Reserve System went into effect, even though that period included the greatest deflationary period—the Great Depression and the period before 1914 included the greatest inflationary period—the Civil War.
You don’t need a PhD in economics to understand that the Federal Reserve is asleep at the wheel if the value of a dollar has declined by 95% during the last 85 years (it has) and one of the Fed’s primary goals is to keep price increases at a reasonable level (it is). Many in Congress have suggested that the United States dramatically changes how the country manages its financial regulatory structure—maybe it’s time to start by giving the Federal Reserve the boot.