The Great Debasement Also by Craig R. Smith Rediscovering Gold in the 21st Century: The Complete Guide to the Next Gold Rush Black Gold Stranglehold: The Myth of Scarcity and the Politics of Oil (co-authored with Jerome R. Corsi) The Uses of Inflation: Monetary Policy and Governance in the 21st Century Crashing the Dollar: How to Survive a Global Currency Collapse (co-authored with Lowell Ponte) Re-Making Money: Ways to Restore America’s Optimistic Golden Age (co-authored with Lowell Ponte) The Inflation Deception: Six Ways Government Tricks Us...And Seven Ways to Stop It! (co-authored with Lowell Ponte) Also by Lowell Ponte The Cooling Crashing the Dollar: How to Survive a Global Currency Collapse (co-authored with Craig R. Smith) Re-Making Money: Ways to Restore America’s Optimistic Golden Age (co-authored with Craig R. Smith) The Inflation Deception: Six Ways Government Tricks Us...And Seven Ways to Stop It! (co-authored with Craig R. Smith) The Great Debasement The 100-Year Dying of the Dollar and How to Get America’s Money Back by Craig R. Smith and Lowell Ponte Foreword by Pat Boone Idea Factory Press Phoenix, Arizona The Great Debasement The 100-Year Dying of the Dollar and How to Get America’s Money Back Copyright © 2012 by Idea Factory Press All Rights Reserved, including the right to reproduce this book, or parts thereof, in any form except for the inclusion of brief quotations in a review. Printed in the United States of America. For more information contact publisher. Cover art by Dustin D. Brown Editing by Ellen L. Ponte Portions of this book originally appeared in two 2011 projects by Craig R. Smith and Lowell Ponte: The Inflation Deception: Six Ways Government Tricks Us...And Seven Ways to Stop It! and Re-Making Money: Ways to Restore America’s Optimistic Golden Age Copyright © 2011 by Idea Factory Press. All Rights Reserved. Portions of this book originally appeared in The Uses of Inflation: Monetary Policy and Governance in the 21st Century by Craig R. Smith Copyright © 2011 by Swiss America Trading Corporation All Rights Reserved. Library of Congress Data ISBN Number 978-0-9711482-7-7 First Edition - November 2012 Idea Factory Press 13232 North 1st Avenue, Phoenix, AZ 85029 Tel. (602) 918-3296 * [email protected] Updates, reviews and more are posted at http://www.thegreatdebasement.com Table of Contents Foreword by Pat Boone ...........................................................................vii Introduction by Craig R. Smith .................................................................9 PART ONE – The Dollar’s Rise and Fall Chapter One – A View from the Cliff ......................................................17 Chapter Two – Ascent of the Dollar ..........................................................39 Chapter Three – The Progressive Takeover ..............................................55 Chapter Four – The Great Debasement ....................................................77 Chapter Five – The Age of “Modern Money” ........................................101 PART TWO – Tipping Points Chapter Six – The End of the Republic ..................................................133 Chapter Seven – The Mandate of Heaven ..............................................155 Chapter Eight – The Dollar Engulfed ....................................................171 Chapter Nine – The Dollar and Its Enemies ...........................................187 PART THREE – How to Survive the Death of the Dollar Chapter Ten – Ghost Money: After the Dollar’s Nine Lives ..................215 Chapter Eleven – New Dark Age or Golden Age? .................................227 Epilogue – The Ottoman Mirror .............................................................253 Chapter Notes ........................................................................................263 Sources ...................................................................................................271 Dedication To my wonderful wife and best friend Melissa Smith, who makes me better each day and raised our daughters Holly and Katie to love the Lord with all their hearts. Also to my Pastor Tommy Barnett, who taught me that doing the right thing is always the right thing to do, and to always hold onto the vision. Foreword by Pat Boone “Wealth obtained by fraud dwindles, but the one who gathers by labor increases it.” – Proverbs 13:11 The Framers of America’s Constitution followed the Biblical standard for money, specifying that the U.S. Dollar be an honest measure of silver or gold. So long as America kept faith with this standard, between the 1820s and the creation of the Federal Reserve Board in 1913, the purchasing power of our dollar over that time actually increased in value. American prosper- ity grew in part from keeping our money an honest medium of exchange and a store of reliable value trusted around the world. In 1913 America began “The Great Debasement” of our currency, the turn from gold to today’s Federal Reserve Notes, paper fiat money based only on politician promises. And as the Bible warned, in less than a century the buying power of our paper dollar has dwindled to only two cents of its 1913 value. In this book my long-trusted friend and advisor Craig Smith and former Reader’s Digest Roving Editor Lowell Ponte explain how this happened, and how our government continues to debase the dollar as a deceptive way to tax and control us. If this is not stopped soon, the dollar is doomed. Craig and Lowell show how to free our nation, and protect our families, from soon-to-skyrocket inflation and debased values created by our rul- ing Inflatocracy – government of, by and for inflation. Each of us can help determine whether The Great Debasement will bring us to a new Dark Age or a new Golden Age of sound money, prosperity and higher values. “By the common consent of the nations, gold and silver are the only true measures of value. They are the necessary regulators of trade. I have myself no more doubt that these metals were prepared by the Almighty for this very purpose than I have that iron and coal were prepared for the purposes in which they are being used. I favor a well-secured convertible paper currency. No other can to any extent be a proper substitute for coin.... “The present incontrovertible currency [fiat Greenbacks] of the United States was a necessity of war, but now that the war has ceased, and the government ought not to be a borrower, this currency should be brought up to a specie [gold and silver] standard; and I see no way of doing it but by withdrawing a portion of it from circulation. “I have no faith in a prosperity which was the effect of a depreciated currency, nor can I see any safe path to tread but that which leads to specie [gold and silver] payment. “The extreme high prices which now prevail in the United States are an unerring indication that this business of the country is in an unhealthy condition. We are measuring values by a false standard. We have a circulating medium altogether larger than is needed for legitimate business. The excess is used in speculations.... The longer the inflation continues, the more difficult will it be for us to get back to the solid ground of specie [gold and silver] payment, to which we must return sooner or later. “If Congress [fails soon to return to precious metal-backed money] we shall have a brief period of hollow and seductive prosperity, resulting in widespread bankruptcy and disaster. There are other objections to the present inflation. It is, I fear, corrupting the public morals. It is converting the business of the country into gambling, and seriously diminishing the labor of the country. This is always the effect of excessive circulation.” – Hugh McCulloch Secretary of the Treasury under Presidents Abraham Lincoln and Andrew Johnson. Speech in October 1865 Introduction by Craig R. Smith “Knaves assure, and fools believe, that calling paper ‘money’ and making it tender is the way to be rich and happy; thus the national mind is kept in continual disturbance by the intrigues of wicked men for fraudulent purposes, for speculative designs.” – Richard Henry Lee Declaration of Independence signer First U.S. Senator from Virginia, 1789 After 100 years of deliberate debasement, the U.S. Dollar is dying. America – whose power, prosperity and freedom have been secured by what once was the world’s strongest, most trusted money – cannot long survive as a superpower after the dollar dies. The dollar gave America the economic and hence military strength to de- feat Nazi Germany, the Marxist Soviet Union and others bent on global conquest. In a future without the U.S. Dollar, who will prevent a new Dark Age from descending on the world? In this book we explore how American greatness and the dollar together produced the most innovative and prosperous economy on Earth. Like a cat, the dollar has nine lives – and is now about to lose the last of them. Even thereafter, we expect something called the dollar to return as a Zom- bie or as a ghost through the marvels of technology. The dollar, already dematerializing, will become a specter haunting our economy. We reveal that the Great Depression that began in 1929, and the current Great Recession that emerged in 2008, were mere symptoms of the con- tinuing “Great Debasement” of our money that began in 1913 – and that marks its 100th Anniversary in 2013. During these 100 years, our politicians have deceptively expropriated so much of its value that a 2012 dollar has only two pennies of the purchas- ing power of a