A Brief History Of US Money

Tyler Durden's picture

Submitted by Chris Martenson via Peak Prosperity,

Looking at the past 100 years of the US dollar's history, one theme becomes abundantly clear: in times of crisis, the US government has no issue with changing its own rules or breaking its own laws. And those "temporary" emergency measures have a nasty habit of quickly becoming permanent.

Among the more notable milestones of the past century, the Federal Reserve was created (and soon after took possession of most of the nation's gold reserves), the Bretton Woods agreement made the US dollar the world's reserve currency granting it extraordinary advantage (which America quickly began abusing, continuing to do so up to today), and Richard Nixon ended the currency's convertibility into gold.

Nixon's turning the dollar into something backed only by the "full faith and credit" of the US government ushered in a new era for our country. The fiat dollar we use today for trade and investment is really only an experiment a little more than 4 decades old. We don't have a national experience to draw from in knowing how well it will work over time.

But as we see the US money supply exponentially accelerating since the 1970s, and the Federal Reserve more than tripling its balance sheet since 2008, it's only prudent to ask the question: Without constraints, are we in danger of destroying the purchasing power of our currency by making too much of it?

The full suite of chapters in this new Crash Course series can be found at www.peakprosperity.com/crashcourse

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
lunaticfringe's picture

Without constraints, are we in danger of destroying the purchasing power of our currency by making too much of it?

A- Of course. All fiat currency returns to its intrinsic value. Zero.

KnuckleDragger-X's picture

Full faith and credit, I hae no faith and they have no credit.

Rusty Shorts's picture

... what about - "IN GOD WE TRUST" ???

Slave's picture

Trust in God and keep your powder dry.

Stormtrooper's picture

I am always amazed at how duped the American population has become regarding "money" vs. fiat.

A $10 drop in gold vs. the fiat dollar causes the speculators to yell "fire" in the theater and run.

"Money" is a commodity that does numerous things, it acts as a medium of exchange, a store of value, portable, divisible,......etc.  Anything that requires human effort to extract can be used as money.  Chickens or cows can be money but they are not a very good store of value because they tend to die.  Over the course of 5000 years, humans have recognized that precious metals meet the definition of "money" well.

"Money" is just an exchange of something considered to be of value for something else considered to be of value.  "Money" is something that makes "barter, which is really all there is to an economy" a whole lot more simple by providing a commodity that is univerally recognized as having value (and it doesn't shit in your living room).

Comparing the "value" of precious metals to "funny money" that can be created in unlimited quantities at no cost is a meaningless excercise.  The human population has to resume comparing the quantity of precious metals, a commodity, to the "value" of other commodities relative to PMs.

After a bit of a search, I came across a downloadable file from a research project called the "Cole Report".  It is an Excel spreadsheet listing the prices of numerous common commodities in various cities from the 1700's until 1861.

Because many prices in the 1700's were listed in pounds sterling or other, I chose to start in the year 1800 and take an average price of several commodities until 1861.  There was inflation (due to wars) and there was deflation (can't happen today with Central Banking).

At the time gold was $20.75/ounce (until the U.S. default in 1933).  Using these numbers, I took a quick average of several common commodities to try to understand whether the price of gold today has been a good "store of value".  Here are some results for the average prices during this period.  I converted the average price to pounds (or loaves for bread) and then used some current pricing to determine how much I could buy today with gold at $1300/ounce.

Beef: Average price-12.25 cents/pound; 1 ounce gold buys 169 pounds; today one ounce gold buys 163 pounds at $8/pound.

Bacon/pork: Average price- 9.5 cents/pound; 1 ounce buys 218 pounds; today one ounce gold buys 260 pounds at $5/pound.

Bread: Average price 4.07 cents/loaf.  One ounce gold buys 510 loaves; today one ounce gold buys 650 loaves at $2/loaf.

Butter: Average price 16.79 cents/lb.  One ounce gold buys 124 lbs; today one ounce gold buys 433 pounds at $3/pound.

Coffee: Average price 16.47 cents/pound buys 126 pounds; today one ounce gold buys 217 pounds at $6/pound.

This is a rough evaluation that needs to be adjusted for population growth, productivity, amount of gold available to be used as money, yada, yada, yada.  You can argue the commodity prices but it is clear that gold has maintained its "store of value" property.

The point is that Americans, and humans around the world need to be re-educated to understand the value of gold in terms of its exchange for other commodities.   This is the first step to eliminate the destructive effects of the Central Banks and restore some stability to the economy.  Without the Federal Reserve Bank, Americans could still be paying 9.5 cents/pound for bacon based on the value of real money.   

r0mulus's picture

I think it's a nice coincidence that honest markets and true free market capitalism require honest and educated citizens. i think that great business minds should seize upon that opportunity/crisis as it will only benefit those that wish to deal honestly and win honestly.

Urban Redneck's picture

You do realize that the price of gold did actually FLUCTUATE in the year 1800 just like it always fluctuates. Using an OFFICIAL price of $20.75/oz is about as bullshit as using the official $42.22/oz in 2014.

sleigher's picture

By how much did it fluctuate?  Enough to undermine the points he is making?

Urban Redneck's picture

Based on his methodology of picking two specific points in time, and official as opposed to market price of gold, and converting pounds to dollars at an unknown rate. Yes.

dirtyfiles's picture

soon as the petrodolar die who needs worthless US$

logicalman's picture

A brief history of money.

Money was invented by the rich, to keep the rich rich.

Worked well (for the rich) so far.

mister maghrebi's picture

hey guys , whats going on in this thread ?

bullish on federal reserve notes or what ?

Seasmoke's picture

Yes of course motherfucker. Isn't that why we are all here at ZH ?

Dr. Engali's picture

Let's start with the fact that FRNs are not money, they're currency. There is a big difference. Now, continue on with the lesson.

logicalman's picture

I keep saying that too, but all I get is confused looks.


Kirk2NCC1701's picture

And let's not forget the FRNs are only a small part (M0) of the Total Money* Supply

See  https://en.wikipedia.org/wiki/Money_supply

*  Yes, I realize that what the Fed and its followers call "Money" is Currency, since FRNs are a "Store of Value" for only a short period of time -- given Price Inflation (caused by the inflation/increase in the 'Money' Supply).

Pool Shark's picture




What Americans regularly refer to as "money" is really just credit: a bunch of 1's and 0's in a banker's computer.

We have a $17 trillion economy with only about $4 trillion in 'currency.' The rest is all make-believe.

Our 'Dollar' isn't even backed by paper anymore...


toros's picture

The crash caused the balance of trade to collapse. Fewer excess trade dollars, fewer bond purchases. The FED, Japan, and Belgium(BofEngland?) stepped in to fill the void. We have to wait and see if the dollar will collapse. $billions of bonds begin maturing in '16. Looks bad on paper.

alexcojones's picture

Is it just me, or is there more Legal Tender-Kate Upton Boobs on ZH ads?

More T & A than ever before.

Click Bait Currency?

Not that I mind - but but Butt

RaceToTheBottom's picture

I don't have any faith in the "full faith and credit".



Rusty Shorts's picture

Ruled by Aliens (aka "Bankers")


I made this video to point out all the Biblical imagery that adorns the flags from countries around the World. I already made some videos where I read directly from the book of Ezekial and talk about how the LORD of the Trinity is an alien surrounded by 4 four headed aliens that have UFOs hovering overhead. They also describe how the LORD, who is an alien from another planet, calls the Israelites his CHILDREN. If you believe what the Bible is saying, it makes clear that Jews are aliens from another planet.

I read from Ezekial, then I point out all the flags of the World that have the same imagery described in the book of Ezekial. The 4 four headed aliens that surround the LORD have the face of a man, face of an eagle, face of a lion, and the face of an ox. Then notice all the STARS, EAGLES, LIONS, and CROSSES in these flags. It is NOT a coincidence that almost every flag in the World has stars. All of this imagery comes back to the book of Ezekial and the first book of the Bible that describes the full glory of the LORD in appearance.



TulsaTime's picture

Ignorance goes way back....

Rusty Shorts's picture

The Constitution of the United States


Article I - Section 10

Clause 1:

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

Rusty Shorts's picture




Section 4 - Republican government;


The United States shall guarantee to every State in this Union a Republican Form of 

Government, and shall protect each of them against Invasion; and on Application of the 

Legislature, or of the Executive (when the Legislature cannot be convened) against 

domestic Violence. 

JoJoJo's picture

They are not UFOs they are wheels with eyes and God's presence is pictured in the midst of the four wheelswitheyes "vehicle" And you forgot the 6 wings and the mission of Ezekiel.

smcapmachine's picture

Hence the reason to own assets (stocks)...protection from the USD decline. And you all wonder (cry) day after day why the market continues to climb as the fed floods the US with liquidity.

Mercuryquicksilver's picture

Who will be the last one left to turn off the lights when the show is over?

ekm1's picture

There is one universal definition of money that applies to anything used as money during human history


- Money as reserve


- Money as credit and debt


Both are debt, but both are different kind of debt

lasvegaspersona's picture

Your definition of money is just that 'your definition'. Money can be defined by it's functions, store of value, unit of account, medium of exchange. There is no rule that prohibits the various functions of money from being divided amongst several things...ie currency could be medium of exchange while gold becomes the preferred store of value.

Herdee's picture

There's a big difference between true money as defined in The Constitution of The United States of America and paper fiat currency that says on it "Federal Reserve Note". Americans have to wake up because what people call money today is not,it's currency.The monetary policies of the Federal Government have been hijacked by a syndicate of multinational banks and corporations that are destroying your personal freedoms through constant war.

Rootin' for Putin's picture

Money.  The more they print the less i have.

marathonman's picture

Money value works in reciprocal to quantity.  1/10 = 0.1, 1/1000 = 0.001, 1/10,000 = 0.00001, etc. until 1/? = 0.  Governments everywhere through history run into this very problem.  They debase the currency until it is worthless.  Then it starts over.  Again, and again, and again, and again, etc.....  For all our intelligence, we really aren't very smart.

DOGGONE's picture

Retired research scientist. I try to end The Public Be Suckered status quo. http://patrick.net/forum/?p=1230886

AdvancingTime's picture

I contend one of the biggest problems in America is the massive growth in crony capitalism and corruption in Washington. Much of this can be attributed to the ability of those in control "changing the rules" and positioning themselves to benefit at every corner. In our busy and complex world we have found it impossible to watch all the players and keep them in line. More on how empires collapse in the article below.



kchrisc's picture

"I contend one of the biggest problems in America is the massive growth in crony capitalism and corruption in Washington...."

You are correct, but all of it begins and ends with the Federal Reserve, fraudulent-reserve banking and the banksters.

"Guillotine the Fed!"

An American, not US subject.

kchrisc's picture

Money ended in America on December 23, 1913 when the bansters purchased the DC US. The DC US then in turn turned over the American people to the banksters to be worked, grazed and slaughtered like farm animals.

Guillotine the Fed!"

"An American, not US subject."


Perimetr's picture

Legal tender is not the same thing as money.

Iam Rich's picture

Hmm...behead the fed...interesting.

lasvegaspersona's picture

Have not watched yet but...the Fed has NO GOLD!!. They have certificates worth 11.2 billion for the 8100 tons of gold held by the treasury. 

This is a monster mistake for someone purporting to write about the US monetary system!


OK watched it and Chris is wrong. The Fed holds some gold (500 tons I think) but the 8130 tons of US gold is held at Ft Knox, the Denver Mint, West Point with a small amount in NY. Yes the Fed holds it 'on it's books' but the point is that the US government still owns it and could call it into service for a new currency. A dollar collapse would not cause US gold to be at risk.

JoJoJo's picture

Money is the filthy lucre or unrighteous mammon - compared to spiritual riches. But I can still use a bit of it.

Radical Marijuana's picture

The history of the American monetary systems were due to the ways that the best organized applications of the principles and methods of organized crime were able to prevail, through the War Kings to the Fraud Kings. The creation of the American democratic republic was based on the American Revolution, as a manifestation of the "War Kings" operating in their total historical context of that time. As briefly mentioned in this video, at the beginning American money was supposed to be backed by gold and silver, whose value was set by Congress:

The 1792 US Coinage Act provided for a national Mint where silver dollars were to be produced along with gold coins, beginning in 1794. The Act states: "The Dollar or Unit shall be of the value of a Spanish milled dollar as the same is now current, to wit, three hundred and seventy-one and one-quarter grains of silver." The Act also prescribed the death penalty for anyone debasing the national currency.

Originally "money" meant metal coins, while a "dollar" was a particular amount of silver. Eventually, the meaning of the words "money" and "dollar" were inverted and perverted, so that the language we use to talk about "money" and "dollars" at the present time is merely another reflection of the general ways that we live in a Bizarro Mirror World, where everything is proportionately backwards and distorted, because the fundamental facts are that MONEY IS MEASUREMENT BACKED BY MURDER. However, that system gradually evolved through the history of warfare being based on backing up deceits with destruction, to become an economic system based on enforced frauds.

That money is measurement backed by murder is the only definition that embraces all the social facts, as well as is consistent with regarding human civilizations as general energy systems. However, the paradoxical ways that works drove social successes to be based on being the best at backing up lies with violence, or through enforcing frauds. Therefore, under our current political economy, people are proportionately successful within that society to the degree to which they are able to be professional liars and immaculate hypocrites. Furthermore, that applies to the controlled opposition groups, just as much as it does to those operating the established systems.

Chris Martenson's presentations tend to be rather superficial, or what I would describe as those of the typical reactionary revolutionary. Since the overwhelming vast majority of people have adapted for generation after generation to live within social pyramid systems, where the real death controls we operated through the maximum possible deceits, while the real debt controls were operated through the maximum possible frauds, the degrees of relative social success were related to how people deal with those facts, or rather, find ways to dance around those facts.

The fiat money systems only work because they are enforced by governments. What gives fiat money its value is the ability of the government to enforce the taxation and legal tender laws, which basically boil down to the ability of the government to murder anyone who resists obeying those laws. (However, of course, that basic social fact is buried under the maximum possible bullshit social stories.)

The American money system was transformed by the international bankers persistently applying the methods of organized crime to the American political processes. Step by step, there was bribery and intimidation, along with the assassination of politicians that otherwise could not be bribed or intimidated. While the creation of the Federal Reserve Board was the most salient symbol, there were earlier phases, such as when silver was demonetized, in 1873, when Congress passed the, "Coinage Act," which resulted in the minting of silver dollars being abruptly stopped.

Actually, there are more profound trends which flowed continuously throughout human history. Human realities were always systems of organized lies operating robberies, because as soon as we define human beings as separate from their environment, then they must necessarily act as entropic pumps of energy. The best ways to describe how those systems work are as manifestations of the principles and methods of organized crime. Those are unitary mechanisms. There is nothing which actually exists outside of them.

The standard kinds of dualistic thinking, using false fundamental dichotomies, and their related impossible ideals, are actually forms of the biggest bullies' bullshit social stories, which are shared by all those groups which act as the controlled opposition against the established systems. What actually existed was an expression of the ways that warfare was organized crime on a larger scale. The history of warfare, in which success was based on backing up deceits with destruction, enabled the surviving War Kings to create the powers of sovereign states, with their systems of legalized lies, backed by legalized violence. The only real connection between human laws and natural laws is the ability to back up lies with violence.

As information became more important than physical power, gradually the Fraud Kings were able to capture control over the powers of governments that the War Kings originally made and maintained. The biggest gangsters today are the banksters. They are in control of the public money supply because they were the best organized gang of criminals, who were thereby able to dominate the political processes. Furthermore, they were able to reinvest the profits from their frauds in more frauds, such as use their money to dominate and control the public school systems, and mass media, so that the vast majority of people would be taught and conditioned to believe in the banksters' bullshit world view.

The real source of governments are that everyone, who is defined to be separate from their environment, have some power to rob, and to kill as the most extreme form of that power to rob, which most backs up that power to rob. Governments were the assembling and channeling of those powers to rob and to kill into the systems made and maintained by the War Kings. Following along the same lines, although in more subtle and sophisticated ways, the Fraud Kings, the banksters, we able to capture control over the powers of governments, in order to be able to legalize private banks counterfeiting the public "money" supply made out of nothing as debts.

The American monetary system is based on those enforced frauds. However, a deeper analysis penetrates into the ways that all private property is based on claims backed by coercions, in which money is the most abstract form of that as measurement backed by murder. Generally speaking, everyone operating within those systems attempt to bullshit about that as much as they possibly can, which not only includes the those operating the established systems, but also, those in the controlled opposition groups.

On Zero Hedge, one will find a stream of articles from the spectrum of various controlled opposition groups, representing their kinds of ideologies, which are based on their preferred sets of false fundamental dichotomies, and "solutions" based on the related impossible ideals. However, the only things which really exist are different systems of organized lies, operating robberies, which may be in various states of dynamic equilibria with each other.

Changing from one monetary system to another is changing the dynamic equilibria between the systems of lies operating robberies, or sometimes more radically becomes relatively new systems of lies operating robberies. Theoretically, we should better understand the history of US Money, in order to develop a better monetary system. However, since the debt controls are backed by the death controls, in fact, it is not possible to develop a better monetary system without a better murder system to back that up. It is at that point that the profound paradoxes of militarism emerge, that warfare was the oldest and best developed social science, whose success was based upon deceits, in which context spies were the most important soldiers. The political economy was built on that foundation, because economics is a science like warfare is a science, where financial success was based on enforced frauds.

Deeper into American history, we had the process where the entire North American continent was robbed from the people who had been living there for more than 10,000 years, before the European invasion during the last 5 Centuries grafted Neolithic Civilization onto North America, after decapitating the previously existing systems that the natives had developed. Similarly, during American history there were significant periods of time when the enforced frauds took the forms of slavery rationalized by racism. The current debt slavery systems set up by the banksters have created a sophistical social slavery system, that controls everyone who is forced to use the fundamentally fraudulent money supply produced by the banksters.

What that history was becomes more and more plainly obvious, to anyone who bothers to investigate that more deeply, as could be reviewed in this collection of Excellent Videos on Money Systems. However, we mostly continue to see the controlled opposition to the established systems present their case in ways similar to what Chris Martenson tends to do.

I propose that we should go through intellectual scientific revolutions, in order to understand human systems as general energy systems. However, being more scientific in that way demonstrates what I said above, that human societies necessarily operate according to the principles and methods of organized crime. Thus, understanding the history of US Money, with the goal of developing some better monetary system, should go through at least two different levels. The first level is to understand how and why the banksters were able to capture control over the public money supply, and the second level is to propose better ways to operate monetary systems which remain consistent with what is discovered after a more penetrating analysis of what actually developed previously during history.

Since the US Money still is the global reserve currency, those considerations necessarily apply globally, where there have been developed globalized systems of electronic fiat money frauds, backed up by the threat of the force of atomic bombs. In the end, our political economy problems are inside of our human ecology problems. The biggest of all those problems is how to operate human murder systems after the development of weapons of mass destruction, because no real money system can actually exist without some murder system to back it up.

Of course, the issue of the existence of weapons of mass destruction even more emphasizes the theoretical imperatives that we should go through sufficient intellectual scientific revolutions in order to cope with that. However, at the present time, the established systems are almost totally based on bullshit, and are only significantly opposed by groups which continue to operate within the same bullshit frame of reference.

The history of US Money is the history of measurement backed by murder, which basically goes back and back in time as far as one looks. In turn, the future of US Money, or any other emerging possible new monetary systems, while be the future of backing up measurements with murder. Of course, at the present time, the vast majority of people continue to deliberately ignore that. Therefore, most articles and comments published on Zero Hedge are based on mostly still deliberately ignoring that, although their analysis is usually more penetrating than that presented by the mass media, or the mainstream economists, who were mercenary intellectuals, whose careers were based on spouting bullshit that the banksters' would approve of.

Of course, at the present time, the banksters' debt slavery systems have generated numbers which have become debt insanities. In that context, it seems quite impossible to have any rational public debates about those problems. After one looks at the exponential growth charts, such as presented in that video above by Chris Martenson, then I believe that the following two links go to charts which seem to indicate the most probable futures (unless there was some series of technological miracles, and even greater political miracles):



Mark_BC's picture

That was quite a post. Isn't it a bit of a waste to be posting it here inthe comments section, never to be read again?

Radical Marijuana's picture

Yes, well,





There is no practical point to any criticism whatsoever, since the established systems of enforced frauds are runaways, while no rational evidence nor logical arguments about those will change them from automatically getting worse, faster. The established systems are runaway social insanities, headed towards psychotic breakdowns, while nothing I may say, nor do, will really make any difference anyway!

I enjoy attempting to understand how things work. Writing is a tool to help thinking. Therefore, I write my comments, because I am merely thinking out loud, after I watched that video. However, there is no practical point to bothering to do so, other than to merely attempt to understand things, for their own sake, simply because one may enjoy attempting to understand them.




joego1's picture

A clay pigeon in slow motion.

esum's picture

when Pablo Escobar was on the run in the mountains, he burned $2.2 million bucks to keep him and his family warm. HE KNEW THE VALUE OF A DOLLA

esum's picture



Libtard wacko