Dr. Ellen K. Rudolph Blog Economics 101 for Concerned Citizens – Dr. Ellen's Blog

Economics 101 for Concerned Citizens

Posted on October 15, 2012 By

You and I know that money matters, and yet this is clearly something that the U.S. Congress and Presidents don’t seem to get, and haven’t understood for years. (Maybe they just don’t want to understand it?)

It used to be that our monetary system directly linked the value of our currency to that of gold, which meant that the Feds couldn’t increase the amount of money in circulation without adding to (or at least maintaining) our gold reserves.

However, that all changed. In 1933 President Roosevelt (FDR) abandoned the gold standard with the groundless claim that it would somehow help combat the effects of the Great Depression.

Then in 1971 President Richard Nikon completely severed the ability of foreign governments to exchange our dollars for gold. The thinking at the time, of course, was to keep foreigners from sapping our gold reserves.

Consequently the Federal Reserve, which BTW is a private bank, and not subject to audits by Congress, has had very loose monetary policies ever since.

How so? By cheapening the dollar with its now unfettered ability to print money with which to flood the economy.

There are critics on both sides of this issue but it has certainly allowed our government to spend far beyond its means. And in doing so it has severely impoverished the lives of most American citizens.

FACT: the executive and legislative branches of our federal government are literally addicted to spending taxpayer money without giving the slightest thought to ever balancing a budget.

Things you should know

No Democrat-controlled Congress has balanced a federal budget, and President Dwight D. Eisenhower was the last Republican President to have a 1.5 billion dollar surplus that the following year grew to 2.2 billion.

Still, that is a drop in the budget in today’s monetary reality.

While President Bill Clinton took great pride in a strong economy during his administration, and while he was the last President to actually preside over a balanced budget, his management of budget surpluses at that time wrecked havok with our economy.

Think giant Clinton tax hikes, and the Fannie May and Freddie Mac housing bubble that grew and then burst under Clinton’s watch; a bubble that was underscored by epic levels of mortgage-backed debt. The misguided idea at the time was that every American, fiscally deserving or not, should be able to buy a house.

FACT: the housing market has still not recovered from that Clinton-induced mortgage disaster.

FACT: Republicans no longer balance budgets either.

They, too, ignore the true causes of the deficit that are literally strangling our economy.

We all know what they are: unfunded expansion in Medicare, welfare entitlements, wars, the highest corporate tax rate in the world, an idiotic tax code, and years of massive entitlement-driven illegal immigration.

And that’s just the short list!

It’s up to voters now

Only an informed citizenry will ever find the courage to rein in these career spendthrifts.

It is incumbent on us, and us alone, to learn for ourselves why America is at the brink of financial disaster and who (or what) can be blamed for this.

To do that we need to educate ourselves about our monetary system, about global banking concerns, and about things like currency manipulation, the history and controversies associated with the Federal Reserve, the abandonment of the gold standard, the government’s fuzzy accounting systems, and more — including the progressive’s ideological push for wealth distribution.

If you want to learn more, and I hope you do, I have posted a book list of some of the most important and influential books on economics HERE.

I recommend them highly, even for those who consider themselves to be economically illiterate.

You are not alone!

It’s time we changed that, don’t you think?