{"id":318108,"date":"2022-09-25T01:00:40","date_gmt":"2022-09-25T05:00:40","guid":{"rendered":"https:\/\/www.sgtreport.com\/?p=318108"},"modified":"2022-09-24T02:02:50","modified_gmt":"2022-09-24T06:02:50","slug":"ron-paul-americas-first-hyperinflation","status":"publish","type":"post","link":"https:\/\/www.sgtreport.com\/2022\/09\/ron-paul-americas-first-hyperinflation\/","title":{"rendered":"Ron Paul: America\u2019s First Hyperinflation"},"content":{"rendered":"

from Birch Gold Group<\/a>:<\/em><\/p>\n

\"\"<\/p>\n

By Ron Paul, for\u00a0<\/i>Birch Gold Group<\/i><\/a><\/p>\n

Today, we\u2019re seeing 40-year record inflation thanks to a combination of irresponsible monetary and fiscal policies. I\u2019ve spoken to a lot of Americans who are seriously worried we\u2019ll see a destructive bout of hyperinflation.<\/p>\n

If we do, you may be surprised to learn it won\u2019t be the first time\u2026<\/p>\n

Today I\u2019m going to tell you the story of America\u2019s first hyperinflationary episode. Our Founding Fathers learned a crucial lesson from it, and tried to ensure it wouldn\u2019t happen again\u2026<\/p>\n

TRUTH LIVES on at\u00a0https:\/\/sgtreport.tv\/<\/a><\/p>\n

America\u2019s first hyperinflation<\/h2>\n

During our own nation\u2019s Revolutionary War in 1775, the Continental Congress legalized the printing of paper money. Politicians thought there wasn\u2019t enough specie (real<\/b>, or gold and silver) money\u00a0in the entire nation,\u00a0<\/i>so they decided to make their own.<\/p>\n

Historians estimate that just $10 million<\/a>\u00a0in real money was circulating in the U.S. at the time. So Congress authorized IOUs to be used as money. They paid for food and horses and weapons, even paid soldiers in \u201ccontinental currency<\/a>.\u201d<\/p>\n

Here\u2019s an example:<\/p>\n

\"Continental<\/p>\n

Image via\u00a0University of Delaware<\/a><\/p>\n<\/div>\n

You\u2019ll observe there\u2019s a clear value of \u201cTWENTY Spanish milled dollars or the value thereof in gold or silver.\u201d Well, Congress had promised to begin redeeming this paper money in the future \u2013 as early as 1779.<\/p>\n

Presumably<\/i>, the war would be over by then, one way or another! Either the entire Continental Congress would be hanged by General Howe or Sir Thomas Gage as traitors, or General Washington would\u2019ve kicked the monarchists out. After the war was over, Congress decided, they\u2019d have\u00a0plenty of time\u00a0<\/i>to figure out ways to tax their citizens and make good on the promises all this paper money made.<\/p>\n

Ah, the best-laid plans\u2026<\/p>\n

Two small problems:<\/p>\n

As you might remember from high school, the Revolutionary War was still going strong in 1779. The Continental Army suffered a truly awful winter in Valley Forge, morale was poor, public support was lower than ever\u2026<\/p>\n

Also, Congress had gone just a little too far with their money-printing. They issued a total of\u00a0$226 million\u00a0<\/b>in paper money. That\u2019s right \u2013 they\u00a0increased the money supply more than twenty-fold!<\/i>\u00a0What happens when you increase supply dramatically without a balance of increased demand? Value plummets \u2013 and by 1779 the Continental dollar was a joke. Our nation\u2019s first paper money traded at about 5% of its face value\u00a0if it was accepted at all<\/i>.<\/p>\n

By 1781, Continentals had become so worthless they simply weren\u2019t circulated any more. No factory or shopkeeper or handyman would accept them as payment\u00a0even at 1% of face value<\/i>. Continental bills became bookmarks or toilet paper.<\/p>\n

This sorry episode of our national history, paying patriotic volunteer soldiers in\u00a0absolutely worthless\u00a0<\/i>paper money, caused an economic crisis\u00a0as bad as the Great Depression!\u00a0<\/i>GDP shrank by a third<\/a>.<\/p>\n

The situation wasn\u2019t stabilized until 1782. Congress appointed Robert Morris to the newly-invented position of Superintendent of Finance. Morris opened a bank, arranged a loan of gold and silver coins from France, and\u00a0personally financed the war effort!\u00a0<\/i>He signed IOUs\u00a0in his own name<\/b>\u00a0to get crucial materiel for the troops. Morris even opened the first U.S. Mint to begin producing the first official gold and silver coins for the U.S.<\/p>\n

The U.S. won the war,\u00a0finally<\/i>. The last British troops didn\u2019t board transports to set sail for home until November 25, 1783.<\/p>\n

But our Founding Fathers had learned a valuable lesson.\u00a0According to Robert Wright<\/a>, Benjamin Franklin even caustically observed that the depreciation of the Continental had essentially acted as a tax on the population which financed the war.<\/p>\n

Even though they weren\u2019t economists (really there wasn\u2019t such a thing back then), they\u2019d seen the nation\u2019s economy crippled by their experiments in what we\u2019d call \u201cModern Monetary Theory\u201d today.<\/p>\n

So they did their very best to prevent such a disaster from ever happening again \u2013 in the Constitution itself.<\/p>\n

How the Constitution tried to prevent inflation<\/h2>\n

The Constitutional Convention of 1787 includes the following text from Article I, Section 10, Clause 1 (also known as the\u00a0 \u201cContract Clause\u201d):<\/p>\n

No State shall\u2026 coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts.<\/p><\/blockquote>\n

And Article I, Section 8, Clause 5 (the \u201cCoinage Power\u201d clause) states in part:<\/p>\n

[The Congress shall have Power . . . ] To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures\u2026<\/p><\/blockquote>\n

When we consider these along with the Ninth and Tenth Amendments, we get a very clear picture of the\u00a0Constitution\u2019s monetary policies<\/a>:<\/p>\n

    \n
  1. A dollar is a silver coin containing 371.25 grains of pure silver \u2013 based on the Spanish milled dollar, which contained 371.25 grains of pure silver, about 3\/4 troy oz, by weight. (Before the 1792 Coinage Act, the Spanish milled silver dollar was the only dollar Americans knew of.)<\/li>\n
  2. Only gold or silver coins and currency (banknotes backed by gold or silver) can be legal tender.<\/li>\n
  3. No U.S. state may issue coins or currency \u2013 only the Federal government has this power.<\/li>\n
  4. No one may counterfeit government-issued money \u2013 one of the few crimes expressly mentioned in the Constitution.<\/li>\n
  5. Unbacked currencies ( fiat money notes, or \u201cbills of credit\u201d not backed by anything of value) are\u00a0<\/b>forbidden<\/i><\/b>.<\/li>\n<\/ol>\n

    In other words,\u00a0based on the Constitution<\/i>, only gold and silver coins (or banknotes readily redeemable for such coins) can be accorded legal tender status.<\/p>\n

    See, the Founders learned their lesson! They\u00a0explicitly\u00a0<\/i>prohibited the mistake of 1779 from ever happening again! They gave a young nation a plan to avoid the temptation of \u201cprinting money\u201d and destroying its economy.<\/p>\n

    Current Federal law<\/a>\u00a0states that all \u201cUnited States coins and currency (including Federal Reserve notes\u2026) are legal tender for all debts, public charges, taxes, and dues.\u201d<\/p>\n

    You may know \u201cFederal Reserve notes\u201d under another name. Today, we call them \u201cdollars.\u201d<\/p>\n

    According to our own Constitution, though,\u00a0they are not dollars<\/i>. The Founders saw first-hand how much trouble a government could cause by printing currency out of thin air and tried to prevent our elected leaders from making the same mistake.<\/p>\n

    I\u2019m sad to say that our Founding Fathers failed.<\/p>\n

    The first time the U.S. experienced a hyperinflationary crisis, back in the 1780s, we were lucky enough to be bailed out by friendly nations. Remember, in the 1780s the U.S. was an economic backwater by world standards, with an economy smaller than Spain\u2019s.<\/p>\n

    Today, I\u2019m seriously concerned we\u2019re facing another hyperinflationary crisis. Just like in 1775, our government has issued\u00a0massive quantities\u00a0<\/i>of IOUs based on prospective, future tax revenues. That\u2019s exactly the same set-up.<\/p>\n

    But this time our economy is about\u00a0one million times larger<\/i>. The U.S. national debt isn\u2019t too big to fail, but it\u00a0is too big to save.\u00a0<\/b>We can\u2019t expect a last-minute loan of gold and silver coins from an allied nation to stabilize the economy and save the day.<\/p>\n

    We will very likely see hyperinflation again, and sooner than you think.<\/p>\n

    What can we do about it?<\/p>\n

    Read More @ BirchGold.com<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

    from Birch Gold Group: By Ron Paul, for\u00a0Birch Gold Group Today, we\u2019re seeing 40-year record inflation thanks to a combination of irresponsible monetary and fiscal policies. I\u2019ve spoken to a lot of Americans who are seriously worried we\u2019ll see a destructive bout of hyperinflation. If we do, you may be surprised to learn it won\u2019t […]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[138577],"_links":{"self":[{"href":"https:\/\/www.sgtreport.com\/wp-json\/wp\/v2\/posts\/318108"}],"collection":[{"href":"https:\/\/www.sgtreport.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sgtreport.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sgtreport.com\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sgtreport.com\/wp-json\/wp\/v2\/comments?post=318108"}],"version-history":[{"count":0,"href":"https:\/\/www.sgtreport.com\/wp-json\/wp\/v2\/posts\/318108\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.sgtreport.com\/wp-json\/wp\/v2\/media?parent=318108"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sgtreport.com\/wp-json\/wp\/v2\/categories?post=318108"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sgtreport.com\/wp-json\/wp\/v2\/tags?post=318108"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}