The Decline of the Dollar: America’s Hidden Monetary Betrayal (YouTube Video Transcript)

(00:00:00) Your YouTube transcript will appear here (00:00:01) For well over a century after America's (00:00:03) founding, the US dollar's value held (00:00:05) relatively steady. We would have events (00:00:07) that led to massive inflation, such as (00:00:09) the War of 1812, the Civil War, loose (00:00:12) banking policies. Then when the money (00:00:14) contracted, we would see deflation. (00:00:16) While this was rocky, the value of the (00:00:18) dollar remained relatively unchanged. (00:00:20) $100 in 1790 was equal to about $105 in (00:00:24) 1912. During this time, the United (00:00:27) States currency was tied to either a (00:00:28) biometallic standard or gold standard. (00:00:31) And while there was a first and second (00:00:32) national bank and the national banking (00:00:34) system, there was not anything as (00:00:36) powerful as the Federal Reserve today. (00:00:38) But this would all change in 1913 and we (00:00:41) would see the slow death of the US (00:00:42) dollar, losing 97% of its value over (00:00:45) time. (00:00:49) I'm Ryan Sberg, a retired Marine Corps (00:00:51) infantry officer and combat veteran with (00:00:53) deployments to Afghanistan, Iraq. (00:00:57) I started my journey at the Citadel, (00:00:58) where I graduated with a BA in history. (00:01:01) And I've been researching history for (00:01:03) decades. (00:01:06) To understand the dollar's downfall, we (00:01:08) start with its stable roots. From 1789 (00:01:12) when the US Constitution empowered (00:01:13) Congress to coin money through 1912, (00:01:16) America's currency was largely backed by (00:01:19) precious metals under a biometallic or (00:01:21) gold standard system. (00:01:23) The Coinage Act of 1792 established a bi (00:01:26) metallic standard where both gold and (00:01:28) silver coins were legal tender at a (00:01:30) fixed ratio, initially 15 to1 silver to (00:01:33) gold, allowing for stable money tied to (00:01:35) real assets. This system dominated until (00:01:38) the late 19th century, though silver's (00:01:41) role diminished over time due to market (00:01:43) fluctuations and discoveries like the (00:01:45) California Gold Rush, which shifted the (00:01:47) effective ratio and led to silver (00:01:49) overvaluation. (00:01:51) By 1873, with the Coinage Act, often (00:01:54) called the Crime of 73 by silver (00:01:56) advocates, silver was effectively (00:01:58) demonetized for coinage, paving the way (00:02:00) for a deacto gold standard. This was (00:02:02) formalized with the Gold Standard Act of (00:02:04) 1900 under President McKinley, which (00:02:06) pegged the dollar solely to gold at (00:02:08) $2067 per ounce, ending bialism (00:02:12) officially. Throughout this era, (00:02:14) inflation spiked during wars, the War of (00:02:17) 1812 or the Civil War, with rates up to (00:02:20) 20 to 30% in peak years, but deflation (00:02:23) followed, bringing prices back down. A (00:02:26) key issue during crises such as the War (00:02:28) of 1812 was a suspension of specy (00:02:30) payments. In 1814, amid financing needs (00:02:34) and bank runs, the federal government (00:02:36) allowed banks outside New England to (00:02:37) suspend redeeming notes for gold or (00:02:39) silver, leading to unchecked inflation (00:02:41) and note depreciation until resumption (00:02:43) in 1817. (00:02:45) This pattern of suspensions, also seen (00:02:47) briefly in 1857 and during the Civil (00:02:50) War, highlighted vulnerabilities in the (00:02:52) system where banks could print notes (00:02:54) without full backing, fueling temporary (00:02:56) booms and busts. (00:02:59) Post Civil War, the US faced depreciated (00:03:02) greenbacks, via paper money issued (00:03:04) during the war and heavy debt. The (00:03:06) Resumption Act of 1875 aimed to address (00:03:09) this by resuming specy payments, but it (00:03:12) wasn't implemented until 1879, marking a (00:03:14) full return to the gold standard for the (00:03:16) first time since before the Civil War. (00:03:19) This hard money shift ushered in one of (00:03:20) the most prosperous eras in US history (00:03:22) during the 1880s. While wholesale prices (00:03:25) fell, a natural deflationary trend under (00:03:28) gold due to productivity gains, real (00:03:30) wages rose and the decade saw explosive (00:03:33) growth in manufacturing, farming output, (00:03:35) and overall wealth, not just for (00:03:37) industrialists, but also farmers despite (00:03:40) uneven sector paces. (00:03:43) Overall, the net result from 1789 to (00:03:46) 1912, (00:03:47) the average annual inflation rate (00:03:49) hovered around.5 to 1%. With cumulative (00:03:52) price changes close to zero, (00:03:55) a dollar in 1789 bought roughly what it (00:03:58) did in 1912. No long-term erosion. (00:04:04) This stability came from hard money. You (00:04:07) couldn't just print endlessly without (00:04:08) backing. Banks issued notes redeemable (00:04:11) in gold or silver. and the economy (00:04:13) self-corrected through booms and busts. (00:04:15) But that all changed in 1913. (00:04:18) Enter the Federal Reserve Act. Signed by (00:04:21) President Woodro Wilson on December (00:04:23) 23rd, 1913. (00:04:25) Born from decades of banking schemes (00:04:27) detailed in histories like Murray (00:04:29) Rothbar's works, it created a central (00:04:31) bank system with 12 regional banks (00:04:33) overseen by a board in DC. (00:04:37) Pushed by Wall Street titans like JP (00:04:39) Morgan after panics like 1907, the Fed (00:04:42) gained power to control money supply, (00:04:44) set interest rates, and create dollars (00:04:46) out of thin air through fractional (00:04:48) reserve lending and open market (00:04:49) operations. (00:04:51) While the US remained on the gold (00:04:53) standard at the time with dollar still (00:04:55) convertible to gold until 1933 (00:04:57) domestically, the Fed introduced greater (00:05:00) elasticity, allowing banks to expand (00:05:03) credit more freely within those (00:05:04) constraints, fueling potential inflation (00:05:07) even under gold backing. (00:05:10) Early on, it financed World War I by (00:05:12) printing leading to 1917 1920. Inflation (00:05:16) peaks over 15% annually. (00:05:19) Deflation followed in the 1920s, but the (00:05:21) Fed's loose policies in the roaring 20s (00:05:23) set the stage for the Great Depression. (00:05:26) Fast forward to the 1930s. The (00:05:29) depression hit hard with deflation (00:05:31) reaching -10% in 1932 as banks failed (00:05:34) and money supply contracted. President (00:05:37) Franklin D. Roosevelt responded with (00:05:39) Executive Order 6102 in April 1933, (00:05:43) confiscating private gold at $2067 (00:05:46) per ounce, making it a crime for (00:05:47) Americans to hold gold coins or bullion (00:05:49) with penalties up to 10 years in prison. (00:05:52) Then in January 1934, he devalued the (00:05:56) dollar overnight by raising the official (00:05:58) gold price to $35 per ounce, a 40% (00:06:01) devaluation that transferred wealth from (00:06:03) savers to the government. (00:06:06) This inflated the money supply, ending (00:06:08) deflation but eroding the dollar's (00:06:09) value. Inflation ticked up to 3% by (00:06:12) 1934, but the cost of trust and sound (00:06:14) money. (00:06:16) Overall, inflation was steadily gaining (00:06:18) steam since 1913. From 1913 to 1940, (00:06:22) inflation rose over 40%. Relatively (00:06:25) speaking, this was a dramatic jump from (00:06:27) the early days of the republic. (00:06:30) This shift introduced what economists (00:06:31) called a quasi gold standard or gold (00:06:34) exchange standard from 1933 to 1971. (00:06:38) While the dollar remained tied to gold (00:06:40) internationally, foreign governments (00:06:41) could still redeem dollars for gold at (00:06:43) the new $35 rate, domestic (00:06:45) convertability was banned. Americans (00:06:48) could no longer exchange their paper (00:06:50) money for gold, severing the direct link (00:06:52) for citizens and giving the government (00:06:54) more leeway to manipulate the money (00:06:56) supply without the full constraints of a (00:06:58) true gold standard. (00:07:00) This was a pivotal step toward full fiat (00:07:02) money. It allowed inflation without (00:07:04) immediate gold redemptions, draining (00:07:06) reserves, prioritizing economic stimulus (00:07:08) over hard money principles, and setting (00:07:10) the stage for even greater monetary (00:07:12) flexibility. (00:07:15) Post World War II, the dollar's fate was (00:07:17) sealed at the Bretton Woods conference (00:07:18) in 1944. (00:07:20) 44 nations agreed to peg their (00:07:22) currencies to the US dollar, which was (00:07:24) convertible to gold at $35 per ounce for (00:07:27) foreign governments. (00:07:29) This made the dollar the world's reserve (00:07:30) currency, promoting stability and trade. (00:07:33) Inflation averaged under 2% in the (00:07:35) 1950s, but it wasn't without flaws. As (00:07:38) the US spent on the Vietnam War and the (00:07:40) Great Society programs, the Fed printed (00:07:43) more dollars, leading to gold outflows (00:07:45) as foreigners redeemed for gold. By the (00:07:47) late 1960s, inflation climbed to 5 to (00:07:50) 6%. Straining the system. Breton Woods (00:07:54) provided short-term stability, but sewed (00:07:56) seeds for future devaluation. (00:08:00) The breaking point came on August 15th, (00:08:02) 1971. The Nixon shock. Facing severe (00:08:06) gold runs, France literally sent (00:08:08) warships to the US to retrieve gold. In (00:08:10) a weakening dollar, President Richard (00:08:12) Nixon closed the gold window, ending (00:08:14) foreign convertability and effectively (00:08:16) severing the dollar's last tie to gold. (00:08:19) He also imposed wage price controls and (00:08:21) a 10% import sir charge. The dollar (00:08:23) devalued immediately. By 1973, it had (00:08:27) lost 20% against major currencies, and (00:08:30) floating exchange rates began. Without (00:08:32) gold's anchor, inflation spun out of (00:08:34) control. The 1970s saw double-digit (00:08:37) rates, peaking at 13.5% in 1980 amid oil (00:08:41) shocks and loose money. Stagflation, (00:08:44) high inflation with high unemployment, (00:08:46) crushed savers with the dollar losing (00:08:48) over 50% of its purchasing power that (00:08:50) decade. (00:08:52) This fiat system, money backed by (00:08:54) nothing but trust, enabled endless (00:08:57) printing. In recent years, it hit (00:08:59) overdrive during CO 19. From 2020 to (00:09:02) 2022, the Federal Reserve expanded its (00:09:05) balance sheet from about $4 trillion to (00:09:08) nearly $9 trillion through quantitative (00:09:10) easing, buying bonds, and injecting (00:09:12) liquidity. The M2 money supply surged by (00:09:15) over 40% with trillions printed for (00:09:17) stimulus checks, PPP loans, and economic (00:09:20) support. About $6 trillion in new money (00:09:23) overall. The result, inflation exploded (00:09:26) to 9% in 2022, the highest since the (00:09:29) 1980s, eroding wages and savings. Supply (00:09:33) chains of demand played roles, but money (00:09:35) printing was the fuel. Since 1913, the (00:09:38) dollar has lost over 96% of its (00:09:40) purchasing power. $1 then buys about (00:09:44) what 3 cents does today. (00:09:47) From the Fed's creation to FDR's gold (00:09:49) grab and the quasi gold shift, Breton (00:09:52) Wood's false stability, Nixon's shock, (00:09:54) and COVID trillions, government policies (00:09:57) have devalued our money to fund wars, (00:09:59) crises, and deficits. (00:10:03) Bankers, defense companies, and other (00:10:05) mega corporations have benefited greatly (00:10:07) from these policies. But who got hit the (00:10:09) hardest? The middle class by far. While (00:10:13) asset prices ballooned, inflation wipes (00:10:16) out the middle class savings in some (00:10:17) cases overnight. And to top it all, wage (00:10:20) increases greatly lag behind inflation (00:10:23) and ultimately never catch up. (00:10:27) The US dollar is in a death spiral. Is (00:10:29) there any way to stop it? Can we return (00:10:32) to sound money? (00:10:34) Thanks for watching Manifest History. (00:10:36) Comment below. Has inflation hit your (00:10:39) family hard? 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