Note: examples are not accurate but they’re just my way of explaining it

A long, long time ago, people traded goods with one another using the barter market system. If a farmer grew potatoes and wanted to eat fish, he would make a deal with the fisherman and trade his potatoes for an agreed amount of fish. The system worked, but had its limitations. Mankind later invented a better system where precious metals or scarce spices would be used instead to trade goods.

As civilizations progressed, humanity developed standards in their currencies. They would use gold in their coins and would trade goods using a gold standard. Civilizations thrived with the Gold Standard. Inflation was not a problem since gold always kept its value. During war time, many civilizations dropped the gold standard in order to fund wars or special projects. In many occasions, countries over flooded the money supply with coins that had no gold in them. Money was made out of thin air giving the government extra money to fund wars and projects but eventually as the money circulated the economy, money devalued and prices started to increase. The over supply of money gave the government increased funds, but it was done at the expense of the working class. The devaluation of money created a hidden tax. For the first time in history, mankind had witnessed the awful force of inflation and governments learned that they could tax the people without increasing taxes. They could take from the people and blame the increase in prices on things like the weather, war, etc.

History is full of civilizations that perished due to hyperinflation caused by their willful destruction of their currency.

Centuries past, the modern world, learning the failed policies of the ancients had once again adopted the Gold Standard. The standard once again placed the importance of backing money with gold, but this time, paper was used as a certificate to warranty the redemption of gold, so that at any time, a person could exchange his paper money into gold by simply visiting a bank and exchanging his notes.

The United States witnessed its greatest prosperity during this time. Their constitution prohibited the dollar from deviating away from either silver or gold. Inflation was none existent and the economy had sound money in circulation.

Then, in 1913, congress passed a law in the middle of the night granting full powers to print money to the Federal Reserve. Although the Federal Reserve is a private banking cartel, they alone were given the power to print the money. The private international bankers had of course a different scheme up their sleeves.

As it used to be, before the Federal Reserve, a dollar was worth a fixed amount of gold and this constant never changed. For example 100 dollars would be worth 100 gold pieces. By this time, few people were redeeming their paper money for gold anymore and so their scheme consisted of flooding the market with “fiat money” (or money that’s printed out of thin air and not backed by any commodity).

Fiat money was introduced and mixed with bills that were backed by gold. The result was that in time, there was an equal amount of fiat money to gold money. As long as people didn’t redeem their cash for gold, they were ok, however 100 dollars was no longer worth 100 pieces of gold, but instead it was now worth 50 pieces of gold. The more they printed paper money out of thin air the less the money was worth in gold.

By 1971, basically all the money became fiat money. Gold no longer was the standard and the over production of dollar bills caused compounded inflation. The Federal Reserve continues to this day to print money in order to indirectly fund wars, and to bail out the banking system. Each bill they print devalues the dollar more and more. The money is used to finance banks and a war machine but it is the population that pays through the hidden tax we call inflation. A 700 billion dollar bail out package would more than likely help destroy the dollar and create a bigger problem.

Although the Federal Reserve has the full authority to print 700 billion without asking congress, I believe they made this charade to send a bill they knew it would fail in congress, thus giving them a scape goat to blame for the sad state of affairs. Should the economy collapse due to the destruction of the dollar, they will have congress to blame, but in reality they should only blame themselves.

A recession of Wall Street would be a bad thing, but the destruction of the dollar will cause a bigger problem. The world economy is dependent on a stable dollar, should this continue, a depression might occur world wide. This might just be the beginning and things do not look good right now.