The Inevitable Zero Value Dollar

In 1913, the dollar was arguably worth a dollar... 

But through a Keynesian / Machiavellian scheme, a parade of bureaucrats, using the Federal Reserve (a tool fashioned for this specific purpose), created fiat currency to the maximum extent possible.

Bureaucrats, sanctioned by voters, used this currency to expand the State, to fund wars, and to buy more votes.  It was, and is, disgusting. 

Printed on the demand of political whims, by those unconscious and indifferent to the hidden harms these actions inflict on individuals - this outrageous and unparalleled expansion of the supply of paper money continues... 

One day soon, indubitably, it will come to an end, both bitter and just. 

The Drop

As you can see in the chart right, ore the past 95 years, the dollar has lost 95% of its value.  In simple terms, this means that a dollar earned in 1913 would only purchase 5 cents worth of goods in the modern day.  Or in more brutal terms, government control over what American's have used as money, has systematically stolen 95 out of every 100 units of value a citizen attempted to save.

Now the year is 2007, and the value of the dollar is currently somewhere between 5% and 2% of its original 1913 value.  The plummet continues, and in my analogy, there is no cartoon awning at street level to catch her and send her upward.  No, the destiny of the US dollar is a head splitting date with the pavement.  A bloody sudden death at ground zero.

I realize that the academic observation of a past trend of inflation (the destruction of money) over a period of time, coupled with a overdramatic claim that this trend will continue, proves nothing about the future direction of the value of the USD.  And this, is precisely, Dear reader, what I expect you are most concerned about; "What will happen to the value of MY dollars?"

To examine this, please disregard the 95 year trend, and the 95% devaluation, and let us begin today with a typical savings account of 10,000 US$ of 2007 value.  This account may be your personal rainy day fund, your savings for a trip around the world, or your down payment on a home.  In any case, it's your money, which you've likely gone to some pains to save, (unless your a politician) and understandably you would like to believe that its safe...

However, it's not safe.  I fully expect the trend of inflation to accelerate.  Although you can currently purchase a small foreign built car for $10,000, I predict that the purchasing power of this sum to become nothing. 

If you had a bank account with a billion dollars in it, I expect that to be worth zero also.  The US Dollar is not a safe place to store value. 

As you read on, you'll discover why.  next