The invention the printing press in the 1400’s helped immensely in this nefarious scheme. It allowed for the rapid production of gold receipts, rather than making them by hand. Nevertheless, the standard survived for several hundred more years. Prior to the early 1800's, the international nature of the gold standard was not nearly as effective simply because international shipping and trade were not technologically as easy as they became in the 1800’s. During that pre-1800's era, governments had more power to control the money supply within their own borders. With the advent of modern shipping, international trade flourished and the gold standard facilitated trade world-wide. Governments had even less ability to "mess with" their money because everyone demanded gold or gold-backed currency. It took about a hundred years for governments to figure out how to "play the system". For centuries they could debase their gold and silver coins and get away with it. The debasing of currency literally means diluting the gold and silver content of coins with junk metals, such as tin or zinc. This was one of the means by which governments got "free money". “There is nothing more insidious that a country can do to its people than to debase its currency” - Rep. Paul Ryan (Krugman). They would increase the number of coins in the realm, but keep the excess gold and silver for themselves (and melt that into free coins for themselves). This was the first form of coin inflation. More coins would come into existence, but no new overall gold or silver content. People soon figured out that when any such debasement occurred, merchants simply raised prices to compensate for the precious metal content loss. This is how inflation causes higher prices. It also caused something

known as Gresham's law to kick in: "bad money drives out good money". If you have a pile of high-content government coins, then the market is suddenly flooded with lowcontent government coins, you are not going to spend a "good" coin, when a "bad" coin will do as well. You would hoard your good coins (or melt them down for the gold content). Now, remember the story about the funny sounding dime? That was about debasement. The US government didn’t want to use their precious silver for currency anymore, so they switched to a zinc/copper alloy that was far more abundant - far cheaper. If you look at the edge of a dime or quarter these days, you will see a thin copper line. This line didn’t exist prior to 1964. Once international trade got into full swing, governments couldn't debase their currency so easily. If they did, prices for everything in the world would rise (in terms of the debased currency). Relatively speaking, prices for everything in the world would be cheaper in terms of non-debased currency. People everywhere would want to own non -debased currency and get rid of debased currency (Gresham's Law). Simply because non-debased currency is just worth more by definition - it has more gold or silver content. If people don't want your money, then you can't buy things with it. Trade falls. The standard of living falls. Populations get mad. Governments need to keep their people happy. So, governments needed to find a way to "skim" (i.e. inflate) without the bad effects of loss of international trade. They gradually and collectively decided that the "gold standard" was their enemy. As long as people could actually use gold and silver to trade, and as long as the people had the right to redeem paper money for

actual gold or silver, the government's hands would be tied. If they could only "decouple" their paper money from gold, they could manipulate the money supply with greater ease and the people wouldn't even suspect that they were getting robbed. If the government could convince people that a small ongoing "rate of inflation" was "normal", the population could be continually robbed generation after generation. So, that's what they did. In 1913, the Federal Reserve was born to put state and private banks out of business and centralized the issuance of paper money. When Franklin Roosevelt took the United States off the gold standard in 1933, his budget director was aghast. “This is the end of Western Civilization!”, he declared (Krugman 2) In 1971, Nixon put the final nail in the coffin of the dying gold standard by formally refusing to honor even foreign governments’ claims on dollar gold redemption. The cord was finally cut. Governments could now inflate to their hearts content. In the process, the people get robbed more and more. Day in and day out the value of their life-long savings decreases, even while it just sits idle in the bank. The phenomenon of inflation can spiral out of control quickly. In the last eight years, the amount of paper money in Zimbabwe (basically printed from thin air) has increased by 11.2 million percent. This is what’s known as hyperinflation. “Hyperinflation is a monetary phenomenon and Demand is not a factor pushing up prices. Prices go up because the value of the Fiat paper money is falling as more and more is created…” (Goldonomic) The value of the German Mark suffered the same fate in 1923. People in Germany’s Weimar Republic would actually burn their government issued fiat money to heat their homes because the “money” was cheaper than firewood. People literally got

paid every hour so their spouse could take their earnings and buy whatever food they could before the prices went up again. This only happened because so much paper money was being pumped into the economy with no gold to back it up. While the hyperinflation of the Weimar Republic is an extreme case, other countries have experienced very severe inflation during the Twentieth century as well. Argentina and Israel both experienced annual inflation rates of 1,000% or more during the middle of the century, and most developed nations, including the United States (during the Carter Administration the rate exceeded 20% in the U.S.) have experienced double digit inflation during the twentieth century. With this experience in mind, it is no wonder that calls for a return to a gold standard are being met with increasing interest (Hyper). Essentially the point is this: When governments have free reign to print as much money as they please without any gold to back it up, inflation occurs. This is why the gold standard should never have been abandoned.