The War on the Impoverished

This article will begin a lengthy series on the war against the poor and middle class of the United States.

On December 16, 1773 British colonists in Massachusetts, dressed as Indians, threw three shiploads of tea into Boston Harbor after colonial officials refused to return the taxed to to England, and sparked a revolution, which culminated with the defeat of the British army at Yorktown in October 1781. Thus began the great country that is now known as the United States of America.

Since the inception of our nation on September 3, 1783,.
 we have had many political, economic and social upheavals in our country. We fought the Franco-American war from 1789-1800. There was the Temperance Movement which came to fruition with prohibition in the 1930s. We fought the Barbary Wars, the War of 1812, and the Creek War. From 1846-1848 we fought the Mexican-American war, a war some say is still being fought today, and we've had Women's Suffrage Movement in which women gained the right to vote. From 1861 brother fought brother as our nation was torn in half by a civil war that ended in 1865 with our nation united once again under the same banner, and the abolition of slavery. We fought the Spanish-American War in 1898 which resulted in Cuba's independence from Spain, (funny how a nation can be our friends at the end of one century, and our enemy midway through the next), among other things. And we fought World War I from  1914-1918.

We do indeed have a history fraught with war and strife, but our most troubling war, is our War on the Impoverished, which began on December 23, 1913, with a flourish of President Woodrow Wilson's pen to the Federal Reserve Act, a move which brought an end to competitive banking, and also and end to stability of the US Dollar. No longer were banks allowed to set their own interest rates, from this point on interest rates were used to combat inflation and deflation rather than letting them rise and fall as the markets demanded they should for stability.

High interest rates, (those used by the Federal Reserve to combat inflation), harmed those on the middle and lower rungs of the economic ladder by making the loans they took out or held, harder to payback over time, and low interest rates, (which are used by the Fed to combat deflation), harmed the middle and lower classes because banks chose other avenues of investment, (Treasury Bills, Municipal Funds etc. because the return was higher), and did not loan out their money, which mades it harder for people in the lower income brackets to start a business of their own, and experience upward mobility.

Over the years the Federal Reserve was given more and more power and in 1971 to pay for our military spending and private investments, the US printed up 10% more currency, which lowered the value of currency around the world. Germany in outrage, and not wanting it's Deutche Mark to devalue immediately dropped from the Bretton Woods system, and Switzerland and France started redeeming their US dollars for gold. The Swiss ended up redeeming $50 million worth of US gold, and France ultimately ended up redeeming $191 million for gold. The dollar continued to devalue against foreign currency and on August 9, 1971 Switzerland dropped from Bretton Woods. On August 15 of the same year President Richard Nixon announced a 90 day price and wage freeze, and a 10% surcharge on all imports, and at the same time ended the long standing practice of exchanging US dollars for gold, which was known as the Nixon Shock, and with it the Federal Reserve was given far more power than it had ever enjoyed in the past.

The powers the Federal Reserve enjoy today make the powers it was originally given in 1913 seem pale in comparison. To battle inflation the Federal Reserve orders banks to raise interest rates, and keep higher reserves of cash on hand, and to battle deflation the Fed not only holds interest rates near or at 0%, it also orders the US treasury to print more money, which it uses to buy bonds with, which is called Quantitative Easing by the Fed, and a few colorful names I will not print here, by many others. These inflationary measures (measures to combat deflation), by the Federal Reserve make the US dollar worth less money each time they are used, which of course makes what little money the poor or lower middle class have seem paltry.

From 1783-1913 the value of the dollar remained virtually unchanged, (except during normal inflationary, and deflationary cycles), which meant that a person  at any time during that 130 year period could save his money, and elevate his station in life. Since the advent of the Federal Reserve in 1913, the dollar has shed 90% of its value, and made it harder with each passing year for an individual to save enough money to lift them himself from poverty.

Thanks to the Federal Reserve it is no longer possible for a one wage earner family to flourish, the Fed's monetary practices make it near impossible for a two wage earner family to barely scrape by. Gone are the days when a man could scrimp and save for three or four years to start a business of his own. The American dream has vanished, and been replaced by only wishful thinking among our young and our nations poor.
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