Gold and silver-the ultimate anti-fiat currency vs Fed's ‘sophisticated swindle'

According to precious metals expert Richard Karn, gold and silver can be used as a strong protection against the "global pandemic of corruption" as the government continues to devalue the US dollar. As the governments continue to print money, many experts are suggesting to buy gold and protect yourself.

Author: Brian Sylvester
Posted: Tuesday , 03 Apr 2012

The Gold Report: Richard, at the Gold Symposium in Sydney, Australia, last November, one of your charts tracked the erosion of U.S. dollar purchasing power. Can you give us a summary?

Richard Karn: It's interesting that if you go back to the late 18th century, the dollar has been on the gold standard roughly the same amount of time it has been on the Federal Reserve System, which presents us with a wonderful opportunity to compare the dollar's purchasing power over time.

Throughout the 19th century, with all of the booms and busts, the wars, and the incredible territorial and industrial expansions, the dollar maintained its purchasing power very well on the gold standard. Since 1914, when the U.S. went to the Federal Reserve System and especially since it has become a purely fiat currency system since closing the gold window in 1971, the dollar's purchasing power has collapsed. Under the Fed's administration, the dollar has lost well over 95% of its purchasing power.

We show this chart in our presentations, pointing out that the purchasing power of the dollar on the left scale is in log format while the GDP, M2/M3 and Public Debt figures are in linear format on the right scale. Our intention here is simply to highlight the explosion of nominal GDP, M2/M3 and Public Debt corresponds with the collapse of the real purchasing power of the dollar that attended the end of any pretense to adhering to a gold standard in 1971.

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