MCViewPoint

Opinion from a Libertarian ViewPoint

How Bad Were Recessions before the Fed? Not as Bad as They Are Now

Posted by M. C. on June 30, 2022

The continental was turned back en masse, as it now held no value. Those who trusted the continental over gold were left with nothing. Certain Founding Fathers, after witnessing people’s livelihoods ruined by fiat paper money, decided to make provisions to make sure this mistake would not happen again.

Article 1 Section 10 of the US Constitution states:

No state shall make any thing but gold and silver coin a Tender in Payment of Debts.

This section would be violated throughout US history, from the Civil War to 1933, when President Franklin Roosevelt confiscated US citizens’ gold and prevented them from exchanging the dollar into gold. 

https://mises.org/wire/how-bad-were-recessions-fed-not-bad-they-are-now

John Kennedy

With a recession looming over the average American, the group to blame is pretty obvious, this group being the central bankers at the Federal Reserve, who inflate the supply of currency in the system, that currency being the dollar. This is what inflation is, the expansion of the money supply either through the printing press or adding zeros to a computer screen. It has gotten so bad that in the last twenty-two months, 80 percent of all US dollars in existence have been printed, from $4 trillion in January 2020, to $20 trillion in October 2021.

This is always how recessions start: the expansion of easy money, the creation of bubbles, and heightened prices caused by the devaluation of the currency supply. But recessions occurred long before the Fed’s establishment in 1913.

Were these market failures, as many are taught to believe, or were they still the fault of a central bank or government policy? How bad were pre-Fed recessions? Did they rival the Great Depression or 2008?

The Continental Dollar

During the days of the American Revolution, the Continental Congress convened to figure out how to finance the Revolution. In June 1775, Congress issued six million paper currency notes known as continental dollars in order to pay for the new army and the supplies needed to fight a war. Those who supported the Revolution would jump in line to support this new fiat currency, as it was the patriotic thing to do.

By 1780, the amount of continentals in circulation had reached 241 million, and the continental had done its damage. The patriots who bought into the fiat dollar suffered the most, while people like David Hall, who by order of Congress was permitted to print out fiat bills, and the Loyalists, who kept their gold and silver specie were able to stay financially afloat.

The continental was turned back en masse, as it now held no value. Those who trusted the continental over gold were left with nothing. Certain Founding Fathers, after witnessing people’s livelihoods ruined by fiat paper money, decided to make provisions to make sure this mistake would not happen again.

Article 1 Section 10 of the US Constitution states:

No state shall make any thing but gold and silver coin a Tender in Payment of Debts.

This section would be violated throughout US history, from the Civil War to 1933, when President Franklin Roosevelt confiscated US citizens’ gold and prevented them from exchanging the dollar into gold. 

It’s clear what caused the failure of the continental: Congress and printing presses. This, however, would not be the last economic problem that would face America, the next major downturn came in 1819.

The Recession of 1819

See the rest here

Be seeing you

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