Things That Make You Go Hmmm - The Past, Present And Future Of The Dollar

Tyler Durden's picture

With each passing day bringing us closer to the end of the world's reserve currency, and everyone coming up with their soapbox theories about what happens tomorrow and the day after, perhaps the best way to analyze the future is by looking at the past, which is what Grant Williams has done in his latest TTMYGH letter.  It begins: "What exactly IS ‘The Dollar’? There are currently 47 countries or territories that use the ‘dollar’ as their currency, from the obvious names such as the United States, Australia and Canada to the more esoteric such as Suriname, Tuvalu and Guyana, but where did the word ‘dollar’ come from?" Williams proceeds to analyze the full history of the greenback, and its primary function, to provide an alternative to gold, as the defacto world currency. The truth is that every time the dollar appeared like it was on the verge of irrelevance, a gold standard of some form was reestablished, however briefly. We are now at one such crossroads. Yet only fools know for a fact what will happen hours from now, let alone years. Which is why as Williams concludes, " Whatever happens from here, there are a few of things of which we can be quite certain" :

  • To paraphrase Winston Churchill’s quote about America: Governments will always do the right thing - after they’ve run out of every possible way to avoid doing so
  • The can will be kicked down the road until we run out of road - and into a brick wall
  • The ultimate judge of the success (or otherwise) of every political decision made since Lehman Brothers went to the wall is shiny, yellow and costs about $1,500/oz

"So what exactly IS the dollar?" Read on form some answers.

Things that make you go Hmmm: June 9 (pdf)


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Ahmeexnal's picture

The dollar is a racket.
Then again, so is everything else.

Love is a racket.

blindman's picture

Junior Parker - Love Aint Nothin But A Business Goin On

W T Effington's picture

Assuming that love is a racket somehow, at least it is entered into consensually and not forced upon individuals through violence or the threat of violence. Like legal tender laws.

blindman's picture

you have obviously forgotten what it is to be compelled by
the hormones of nature itself, good for you ! you see, nature has
its own trick bag and secret plans, conspiracies you might say,
that it perpetrates against the satisfaction and accomplishments
of its own creations. love, it's a bitch ! here we go ...
Rolling Stones '73 Bitch with Live audio and video
can't take the cut off there... so go here..
hmmm, speaking of nature

Oh regional Indian's picture

Blindman, one of nature's biggest hormone movers is SPRING!

The Rites of Spring, the most violent thign I've seen on stage.

You're right, nature has it's own engines.


SparkySC's picture


Hugh G Rection's picture

Love the Bryan quote.  It's a shame the cowardly lion lost a close battle to McKinley.  The Secret of Oz is a great documentary, and illustrates the potential danger of a gold standard.  What matters is the abolition of government debt money and fractional reserve banking.  If we simply switch over to a gold standard, and the same corrupt bankster assholes own all the gold, we won't be better off.  Free Silver Bitchezz!

macholatte's picture


Hmmmm ........

Invisible Empire A New World Order Defined Full

keating's picture

Gold is in such short supply that its maniptulation is very easy and done frequently. Better to use a basket of commodities, include gold and silver, but also oil, coal, steel, and other commodities. It almost does not make a difference as any basket of commodities is only used to prevent countries from running the printing press. I don't care if it is a basket of barbie dolls and Dodge pickup trucks, as long as the government can't print more money than they can redeem. This would be an enormous gift to savers and to the elderly who live on savings.

chartcruzer's picture

yes! A distributed basket produces smoother returns as the currency is devalued - less hair pulling.    Below is the relationship between major commodity classes.   Note the relative performance of precious metals....[s163683610]&disp=P

BTW the long term performance of the SPX relative to gold - uggggggly.[s235939273]&disp=P

and a comparison of major investment classes relative to gold,,,,  read it a weap.....  or profit....[s238082247]&disp=P

happy trading




Tejano's picture

Who would determine the mix of comodities in your "basket"?

Mr Lennon Hendrix's picture

Currencie it has to be, and monie will make your barbie dolls trash.  Gold in a vault will store, and last forever.  Not even the lifeblood of the economy can do that.

Pumpkin's picture


money. A silver coin of the United States of the value of one
hundred cents, or tenth part of an eagle.

2. It weighs four hundred and twelve and a half grains. Of one thousand
parts, nine hundred are of pure silver and one hundred of alloy. Act of
January 18, 1837, ss. 8 & 9, 4 Sharsw. Cont. of Storys L. U. S. 2523, 4,
Wright, R. 162.

3. In all computations at the custom-house, the specie dollar of Sweden
and Norway shall be estimated at one hundred and six cents. The specie
dollar of Denmark,at one hundred and five cents. Act of May 22, 1846.

Source: Bouviers Law Dictionary 1856 Edition

Sue the Federal Reserve for fraud!  FNRs are not dollars and being legal documents are FRAUD!

slewie the pi-rat's picture

'do the math' w/ slewie:

1) 480 grains in a troy oz., so, 412.5 grains = 412.5/480 = 0.859375 troy oz
2) alloy of 90% silver:  .9 X 0.859375 =  0.77344 oz silver in a "dollar" by law
3) amount of silver in a Morgan or Peace silver dollar = 0.77344 oz.  really. 

got dollars?

FeralSerf's picture

I thought FRNs were notes, not dollars, i.e. the debt instrument you get in exchange for your virtual imaginary dollars.  Just like that note you signed at the bank when you borrowed those virtual dollars to buy that stuff.

Stuck on Zero's picture

Why does everyone talk about a return to the gold standard?  It's not feasible because of the large number of mercantilist countries today.  Mercantilists will sell you something for gold and then will hoard the the precious metal.  They value it above all else.  The result is that all the gold used for trade disappears and that ends all trade.  Back to barter.  Rome learned this lesson, Britain learned it. 

Internet Tough Guy's picture

No gold standard. Gold will stand outside the monetary system, a demonetized physical asset, storing value only. This solves the problem of storing value in currency where the issuer can expropriate it. Without the need to store value the dollar can perform its transactional role, at which it excels.

Freegold; the solution.

disabledvet's picture

We have a God standard basically.  It literally says it on the Greenback:  "in God we trust."  In short:  "have no illusions moron."  Still...there is God.  The irony that only Wall Street not only denies his existence (putting mere men in his stead after exterminating themselves no less!) but laughs and even kills all those who merely acknowledge Him.  IT'S ON YOUR MONEY MORONS.  NOW DIE!  Anywho, "but by the grace of God go we."  Those who proclaim a need for a new standard refuse to acknowledge the existence of the current one--which is not the dollar at all but the Treasury complex.  This is called A MARKET and the reason why currency traders (with apologies to George Soros who is also all Alpha all the time right now) are pretty much meaningless.   (Sorry there Axl "Rose" Merk.)  Once seen through the lens of "markets" you begin to realize what a pile of garbage articles like this are.  IT SAYS ABSOLUTELY NOTHING.  Now maybe the dollar is going to collapse tommorrow.  "I will gladly trade pay you tuesday for a hamburger today" might be a funny way to run a country--but when you make all the hamburgers on the planet such that you can determine the relative worth of every currency on the planet based upon the price of a hamburger believe it or not it beats gold hands down.  Okay--we're mooching.  It's just a word.  A...a...common bond he desires most in this world

mess nonster's picture

"Once seen through the lens of "markets" you begin to realize what a pile of garbage articles like this are.  IT SAYS ABSOLUTELY NOTHING. "

Yeah... I was puzzling over the conection between the history of the dollar and the author's convoluted cogitations concerning the gold standard, when I realized...there wasn't any, despite such a connection being promised. Although I would never call any form of self-pleasure, even the mental kind, a waste of time...

Libertarian777's picture

There are large swathes of people who misunderstand the gold standard.

There are 2 things that a gold standard demand.

1. a definition of the 'dollar' as a specific weight and fineness of gold (or silver).

2. a free market in money (i.e. an American Eagle = Kruger rand = Canadian Maple etc). Competing currencies.

Specifying a 16:1 ratio of gold to silver in coinage (bimetallism) doesn't work either, since it is a government mandate which will lead to one of the two coins being over or under valued at any one time. Greshams Law would lead to one of the two coins disappearing from circulation.

As to your point about 'mercantilism', that only occurs when a. legal tender laws exist. b. competing currencies are not allowed to be used.

As an example. Say we have a dollar stated as say 1 gram of gold. If we kept buying Chinese goods, we'd be exporting large quantities of gold into China (or a mercantilist state). What happens here is there is less gold (money) chasing the same goods (in the USA), leading to the price of goods (in gold) becoming cheaper (each oz of gold buys more stuff), whereas in the mercantilist state (China) the manufacturer who is hoarding his gold from America, has to pay for his manufacturing inputs, leading to an increase in money (gold) in that state. More money (gold), chasing the same goods = things become more expensive (each oz of gold buys less stuff). Note, that any American who decides to SAVE his gold coin and not spend it, has MORE purchasing power over time. Note also though, that the Chinese manufacturer would stop selling stuff to the USA, since he gets progressively less gold for each shipment (since Americans with gold would be demanding MORE for each oz). So the demand has a way of killing itself off when things are out of balance.

Since things are cheaper in the USA than China, and competing currencies are allowed, Canadians, Chinese, Spanish, Mexicans and South Africans would come to the USA to spend their Maples, Pandas, Pieces-of-Eight, Peso and Krugerrands, leading to an influx of gold into the USA, leading to the supply of gold (money) increasing, leading to the goods becoming more expensive over time. If this continued, then the USA would be able to continue importing Chinese goods, and the Chinese manufacturer would keep sending his goods for the same payment.

The only time this would not happen is if foreign coins were outlawed (as they are currently), so other countries' gold coins would not be able to be used in the USA. This is exactly the problem Nixon had with US gold flowing overseas.

The other problem is that the government likes to spend money it doesn't have, with a gold standard if it kept spending , its coffers of gold would eventually be depleted. It then has to DIRECTLY tax citizens, i.e. asset confiscation, or debase the gold coinage (so much for 'full faith' of the US government). So the gold standard would stop the government from funding wars overseas, as well as sending billions to dictators we want in charge.

It sounds completely counter-intuitive, and it is, because with a gold standard (and competing currency) your money is a free and clear ASSET. It is not a DEBT note (as FRNs are now).

The argument you use is the one that everyone who is against a gold standard always use, that there is not 'enough' gold for commerce. That's the biggest load of B/S. Gold can be divided into as many pieces as you want. Using modern technology, each bank could issue its own gold backed debit cards, and you could pay for things using 1 gram, 1 milligram or whatever division of gold you wish to use. If your bank was issuing more 'gold credits' then gold, it would eventually go under and close, but again this assumes no government intervention to save TBTF.

There are numerous books that go over this, but Ron Paul's 'The Case for Gold', his Gold Commission 'report' is a good start.

Dr. Gonzo's picture

This article makes me want to go out and buy more gold again. I was doing so good saving my fiat too.

nuinut's picture

The fractional reserve banking system, with Central Banks as facilitators, is net short dollars, as the system is composed mainly of claims on dollars (credit).

The printing of currency which accelerates into recognizable hyperinflation is the CB's response to the short squeeze.

Central Banks hold physical gold as a hedge against this.

You should too.


Read this: The Return to Honest Money, and wonder no more about how gold will remedy the dollar's ills this time.


Internet Tough Guy's picture

All your base (money) are belong to us.

Jack Napier's picture

I'm all for a return to honest money, but one thing in your link took me aback. Ron Paul wants to sell the gold in Fort Knox. It bugs me that this guy with masonic roots has everybody thinking he's a champion of the people. So let's sell all our gold for fiat dollars just before they hyperinflate to nothing. Add to that it's only a matter of billions of dollars worth of gold when we owe $14+ trillion. Thanks, but no thanks. This isn't directed at you nuinut as much as shooting for full disclosure.

Tejano's picture

The people of this country have had no claim on, or access to the gold in Fort Knox (if there is any) since the fed gov stole it from them seventy-eight years ago. So why not sell it? Any portion that found its way into private hands would be a blessing.

Also, "we" don't owe $14+ trillion.  The same gov that confiscated the people's money in 1933 might, but I don't.

mess nonster's picture

I say we sell the tungsten in Ft. Knox for the price of gold!!!

nuinut's picture


I think you have your wires crossed, in that the article was not supporting Ron Paul at all, but pointing out his shortcomings on this issue; that he has good ends as his goal, but the means he proposes to achieve these ends are unworkable... FOFOA then describes the means that will achieve those ends, completely in accord with the work of Menger, Mises and Hayek, amongst others.

With all due respect, I recommend you read further than the opening paragraphs before drawing conclusions. 

Jack Napier's picture

I never said the article supported him. I was merely echoing the part of article's sentiment that struck me as important for the sake of those who are too lazy to read it since so many people here are Ron Paul supporters. I used to be one, and I don't like how he's duping everybody. Thanks for posting it.

Long-John-Silver's picture

Returning to a Gold standard for the US Dollar would require the calculated value of 1oz of Gold bullion to inflate to $47,400 in order to cover the current debt. This calculation was based on the published amount of gold held in reserve by the USA and the published amount of US Federal currency in circulation. The last audit of Gold held by the USA was done in 1949. The FED has refused to publish any audit results sense 1949. Currently the amount of Silver held in reserve is zero having been sold on the world markets in an effort to keep Silver prices in check.

maximin thrax's picture

I don't understand what our national debt has to do with the ultimate value of gold. If a dairy was one million dollars in debt and needed $80 per gallon of milk to pay the debt off, then it's going to go bankrupt.

However, if any citizen of any nation could, at any time, buy and sell gold absolutely tax free then all the gold available on earth for purchase would end up being the world's savings, outside of paper investments and interest-bearing accounts. As excess currency (savings) is exchanged for gold, price would rise until all the gold that is theoretically available has changed hands.

The ultimate value of gold, in dollars, should be the value of all long-term savings not in stocks, commodities and bonds, not in checking accounts where cash goes in and out, and including a good portion of capital reserves, converted to dollars and then divided into the world's bullion supply. Gold does not have to back every bit of fiat either in paper or in digital format.

gwar5's picture

A dollar is 1/50th of a blowjob.

Long-John-Silver's picture

That depends on location. I know places where the ratio is 1 to 1.

delacroix's picture

the fellatio ratio, is that like the big mac index?

I think I need to buy a gun's picture

i saw that thing about swiss franc yesterday. 1 gram of gold equals 5 new units of is going on? I get more pissed by the day....i am investing nothing in my business all proceeds just keep going to gold these motherfuckers took the whole system down and we have 75% of the population operating like nothing is wrong!

blindman's picture

@" you tell me. .."
the dollar is a promise, in a long list of promises,
that will be broken on the shores of the minds
and hearts of men, women and children;
as the energy of waves and winds of fluidity pound the
strand of hard parts and stone into grains of sand.
the dollar, the form of a castle, of those grains no
more, no illusion or promise left in the slumping form.
just grains now, waiting for new and better
promises, collective promises, dollars, till no one
believes they are worth the keeping. and ...
you can thank the bankstas and their servants.
jubilee, the great equalizer, is in town. ?
you have all noticed that there is a nearly arbitrary
heirarchy to the musical jubilee, no? yes. here the
razor's edge of war. i would say refuse it all in favor
of nothing even.
wiki .. " The Razor’s Edge is a book by W. Somerset Maugham published in 1944. Its epigraph reads, "The sharp edge of a razor is difficult to pass over; thus the wise say the path to Salvation is hard." taken from verse in the Katha-Upanishad.[1][2]"
mink deville- i broke that promise
[OTE113] On the Edge with Steve Keen
Posted on July 9, 2011 by stacyherbert

tip e. canoe's picture

kicking & sceaming,

we push to the razor's edge.

Jubilee Awaits...

slewie the pi-rat's picture

almost all fiat is traded, worldwide, for gold & silver, each and every day.  i often wonder if people, even the ones who trade fiat for real, realize this.  it's simple beyond belief, yet seems to result in endless confusion.  what's up w/ that? 

so, today, $1 = 1/1544th oz gold = 1/37th oz silver

really.  trust me.  i guarantee it! 

Yen Cross's picture

    I do!  I like the OLD SCHOOL, lack of [....] math. Nice fractional work Slewie/



RECISION's picture

"What exactly IS ‘The Dollar’? There are currently 47 countries or territories that use the ‘dollar’ as their currency, from the obvious names such as the United States, Australia and Canada..."

Say what???

Australia may Call their currency - the dollar - but that is the end of it. 

Not all "dollars" are created equal. And to imply that the Australian dollar is the same as the US dollar (even accidentally) is likely to upset the southern cousins.

Quite frankly, such sloppy writing makes the author of this piece look like a fool.

dudditz's picture

Dollar was backed by silver, gold and now.... $14 trillion in debt.  Yes folks, we have a debt based currency.

mess nonster's picture

Gold is superstition. Aside from its luster and refusal to react with other elements, it has no real intrinsic uses, aside from decoration. One cannot eat it or burn it. On a scale of usefulness, carbon is the king of the earth. We owe our economy to carbon, and when the carbon that can be burned is gone, we will return to our stable little midaeval economies, in which we worship the shiny useless metal.

The discovery of burnable liquid carbon (hydrocarbon) enabled us , briefly, to escape from the superstition  of gold, but when the oil's gone, it's gone, and along with it, our species' brief romp in the fields of wealth.


r101958's picture

Puuuuleeeaaase! Gold has been a medium of exchange for thousands of years.

FeralSerf's picture

I've got an idea.  Why not use little pieces of it as tokens, like bus tokens for example.  Whenever you need to acquire someting from someone else (or get on the bus), you could give them one or more or even portions of one of the tokens.  You could be confident that the tokens weren't counterfeit ones like wood or paper tokens because gold is not too plentiful and gold mining is hard work.  Also the counterfeit if it was made of gold really wouldn't even be counterfeit.  And if you accidentally left it out in the rain, it wouldn't rust.  How cool is that?