An American Looks @ Money Pt.2

Good morning and welcome to September 13th and a Top-Shelf Thursday! Yesterday, we looked at how U.S. money was redefined in the mid-60’s. By the early 1970’s economic situations were requiring additional massaging of the U.S. monetary system. Before we jump into discovering the why’s and how’s, let’s refill our cups and grab a seat. Steely Dan greets us this morning with their 1972 hit, Do It Again.

Gold is up +$4.90 this morning at 1211.00, and is up +11.10 on the month.

Silver is up +$0.04 at $14.28, and it’s still down -$0.29 for the month.

Platinum is up this morning +$10.00 at $809, and is up +$17 for the month.

Precious metals climbed higher yesterday and then again in overnight trading as the dollar has lost traction around the world. It seems the dollars reserve currency status is evaporating faster than even I anticipated. To appreciate world sentiment you needn’t go further than the recent ECB “State of the Union” address where the president of the European Commission said that it was an “aberration” that the EU paid more than 80 percent of its energy imports in U.S. dollars despite only 2 percent of the imports coming from the U.S. If we want to survive this, we best get our financial affairs in order fast!

So, yesterday we looked at money in the United States starting with charge cards (Not credit cards as they weren’t available until the late ‘60’s and common much later.) and we looked at the Coinage Act of 1965 and its removal of silver from coins and currency. Today, I want to pick-up where we left off and direct our attention to the invention of bank cards and revolving credit.

Although Bank of America launched their own consumer cards with revolving credit as early as 1958 it was only in selected California markets and to highly qualified clients and it wasn’t until 1966 that BOA went national to become the nation’s first general purpose revolving credit card. A decade later this card was renamed VISA.

What you say? You thought MasterCard was the first? MasterCard began in 1966, however, it actually began only as interbank card of a group of California banks and it didn’t roll-out nationally until years later.

While Americans were excitedly embracing credit cards, the nation was dealing with rising inflation, oil shortages, the Vietnam Conflict and potential wars in the Middle East and elsewhere. In August of 1971, then President Nixon took action to end dollar convertibility to gold and implement wage and price controls to counter a looming gold run and inflation. With his signature the gold window closed and effectively eliminated the Bretton Woods Agreement of 1949 backing currency with gold. So for any of you historians out there, the date of August 15th of 1971 was the death of the “gold standard” and the beginning of fiat-money for the United States.

So dear readers…are you noticing a pattern? In fact, even a pattern to the $20 bills shown from top to bottom? Ever so slowly our money has changed from a silver and gold backed system to a fiat and plastic system. For you skeptics, your comment may be “so what?” And the answer to that will be offered into tomorrows musings.

Well, I’ll let that be it for today. Go out there and make a difference! See ya later!

*Disclaimer: Precious Metal Musings™ is written for entertainment and news purposes only and should not be used in making purchases and/or sales of precious metals.