Paper Money started off as a paper receipt redeemable for a certain amount of gold on deposit at some secure place as in a bank vault or a castle. This paper money was much easier to transport, handle, and provide change than gold bullion. This could have been a receipt for grain in some silo, or any other commodity. Other commodities are not as durable and need constant maintenance and/or care to assure that their value does not diminish or become destroyed completely. Gold needs less maintenance and is harder to be destroyed completely or damaged.
When President Nixon wanted to borrow money greater than the value of the gold that he had on deposit at Ft. Knox, to pay the government expenses, he had the congress pass laws to stop redeeming US dollars for Gold Bullion from Ft. Knox, and stating that US dollars would now be redeemed with the “full faith and credit of the US government”, meaning that every US dollar could be redeemed for any privately owned property, business, commodity, or anything else of value in the USA.
The US Government only has $11B of gold left in Ft. Knox according to the AP Dec. 21, 2009, 3:44PM, and the US government is continuously allowing our freshly printed US Bonds, US Dollars and other Securities owned by foreigners to be redeemed by purchasing title to privately owned businesses, factories, casinos, hotels, farms, land, ports, breweries, refineries, forests, ports, breweries, refineries, and other privately owned wealth and assets located in the USA that were created by previous generations of US citizens, before the deindustrialization of the USA, instead of redeeming these currencies with gold.
As the USA runs out of title to privately owned real estate, businesses and other existing assets in the USA that foreigners redeem their freshly printed paper US Bonds, etc. that foreigners were paid by US import/distributing/retail companies to created with their labor to manufacture the things that US citizens consumed, these productive foreign industrial nations will then pay less and less US dollars for the freshly printed paper US Bonds, etc. that the US government wants these foreigners to buy at the periodic FED auctions. This is creating worthless currency with the printing presses, except that these new currencies are redeemed with title to US assets instead of Gold from Ft. Knox.
The US government is operating on borrowed money. This is a Ponzi scheme.
Maybe the US government should hire Jeff Skilling, Bernard Madoff, Scott Rothstein, Eddie Fastow, and Sir Allen Sanford plus some of the lesser known Wall Street Master Criminals and financial wizards as consultants to advise the US treasury department and the Federal Reserve Board concerning “How to operate a Ponzi Scheme”! These gentlemen might be the best qualified individuals in the USA with the specialized knowledge and skills required to run the US Treasury department’s Ponzi Scheme.
What will the US government do when the foreign industrial nations no longer pay US dollars to purchase freshly printed paper US bonds, or if they pay only few pennies on the dollar face value or present worth for these freshly printed paper US bonds.
The US government will print up and auction off twice the value desired if the foreigners are only paying 50 cents on the dollar, or 100 times if the bids are 1 cent on the dollar, and then your life savings might not buy you a single loaf of bread!
The Greek government has been providing their population with all sorts of free government provided services, government payroll jobs, and have paid for all of these government expenses with “borrowed” funds? Did the Greeks stop generating national wealth in the past few decades, and decide to start deficit spending to mimic the US financial operations that appeared to be very successful?
Real wealth, jobs, industry, and real monetary value is created and/or acquired ONLY when the members of a family (or a nation, tribe, city-state, etc.) plant, grow and/or harvest something of commercial value from the earth, extract something of commercial value from the earth, provide professional services (medical, legal, dental, engineering, architecture, accounting, land surveying, technology, etc.) to others outside of that family, and/or manufactures or constructs something of commercial value that is consumable (or permanently useful for income or rent) and then sells, leases or rents these items and/or services to parties outside of their family, in return for a net transfer of gold, currency or commodities from other parties outside of their family into their own family. The members of that family can reflect their real wealth and financial security with the accumulation of grain, gold, cattle, jewels, land, buildings, commodities and/or other marketable products for reserve use in times of emergency and/or also to raise the standard of living for the members of that family.