By Jerry Robinson
There is an old joke about money that says while it may not buy happiness, it sure does buy everything else. Benjamin Franklin referred to man’s obsession with money this way: “He that is of the opinion money will do everything may well be suspected of doing everything for money.”
I believe one’s view of money is formed and fashioned by 3 prevailing factors:
- The most dominant factor affecting a person’s view of money is the economic system into which one is born. For example, those of us born in the U.S. are introduced to a capitalistic system from birth. Its espoused virtues are the right to private property, the division of labor, individual rights, and so forth. In contrast, those born in China inherit a communistic economic system. There individuals have fewer rights, and the government plays a much greater role in every aspect of life.
- The next most important factor affecting one’s view of money is family financial philosophies. Parents valuing consumption teach their children not to save. Those exemplifying a strong work ethic teach that money is best earned through hard work. Other parents may be business owners and thus teach money can be accumulated by employing the efforts of others.
- Finally, one’s view of money is shaped by religious and moral understandings of life itself. Some from strict Christian upbringings may [incorrectly] view money as inherently evil. Others see money simply as amoral, an object or tool for accomplishing goals.
Used to be, money in the U.S. was backed by “all the gold in Fort Knox.” Today, however, ours is a fiat currency and has been since 1971 when then-President Richard M. Nixon detached the U.S. dollar from the gold standard. 2009 dollars are not backed by any type of commodity – not gold, not silver, not iron, not corn nor wheat. In fiat currencies, only one thing gives money its value – scarcity. The more scarce the supply of money, the lower the prices of goods and services. The reverse is also true – the higher the supply of money, the higher the prices.
Today’s dollar is losing value everywhere, due in large part to excessive printing by the federal government. Other contributing factors are the government’s lack of a strong fiscal policy and a growing aversion by foreign nations to buy and hold U.S. dollars. Today’s dollar is now worth less than 10% of its value in 1945.
- Against the Euro, the dollar has lost 65%
- Against the Swiss franc, the dollar has lost 18.2%
- Against the British pound, the dollar has lost 42.6%
- Against the Australian dollar, the U.S. dollar has lost 75.6%
- Against the Japanese yen, the dollar has lost 18.2%
Part of the problem with our declining dollar is our national obsession with owning everything in sight. Madison Avenue promotes the next technology gadget and some of us have to have it the day it’s available, regardless of cost. The other part of our declining dollar is due to the federal government. As long as the debt-loving, interest-rate cutting, currency-printaholic feds can’t seem to find the “off” switch on the printing press, the dollar will continue declining in value and in purchasing power.
Economic Fundementals Suggest This Fall and Winter Could Get Ugly - The Market Oracle
China Alarmed By US Money Printing - Right Side News
Dollar falls to one-year low - CNNMoney.com
Gold ends at record high as dollar weakens - MarketWatch
Bankruptcy of Our Nation: 12 Key Strategies for Protecting Your Finances in These Uncertain Times - Jerry Robinson (Book)