Intro- The Root of All Evil
Is the love of money the root of all evil? Or, is the ignorance of money the root of all evil?
What did you learn about money in school? Have you ever wondered why our school systems do not teach us much-if anything-about money? Is the lack of financial education in our schools simply an oversight by our educational leaders? Or is it part of a larger conspiracy?
Regardless, whether we are rich or poor, educated or uneducated, child or adult, retired or working, we all use money. Like it or not, money has a tremendous impact on our lives in today's world. To omit the subject of money from our educational system is cruel and unconscionable.
Changing the Rules of Money
In 1971, President Richard Nixon changed the rules of money: Without the approval of Congress, he severed the U.S. dollar's relationship with gold. He made this unilateral decision during a quietly held two-day meeting on Minot Island in Main, without consulting his state Department or the international monetary system.
President Nixon changed the rules because foreign countries being paid in U.S. dollars grew skeptical because the U. S. Treasury was printing more and more money to cover our depts, and they began exchanging their dollars directly for gold in earnest depleting most of the U.S. gold reserves. The vault was being emptied because the government was importing more than it was exporting and because of the costly Vietnam War. As our economy grew, we were also importing more and more oil.
In everyday terms, America was going bankrupt. We were spending more than we earned. The United States could not pay its bills-as long as our bills were to be paid in gold. By freeing the dollar from gold, and making it illegal to directly exchange dollars for gold. Nixon created a way for the U.S. to print its way out of dept.
In 1971, the world's rules of money were changed and the biggest economic boom in history of the world began. The boom continued as long as the world accepted our funny money, money backed by nothing but a promise by U.S. taxpayers to pay the bills of the United States.
Thanks to Nixon's change in the rules of money , inflation took off. The party was on. As more and more money was printed each decade, the value of the dollar decreased and the prices of goods and assets went up. Even middle-class Americans became millionaires as home prices kept climbing. They received credit cards in the mail. Money was flowing freely. To pay off their credit cards, people used their homes as ATM's. After all, houses always went up in value, right?
Blinded by greed and easy credit, however, many people either didn't see or ignored the dire warning signs such a system created.
In 2007, a new term crept into our vocabulary: sub prime borrower-a person who borrowed money to buy a house he could not afford. At first, people thought the problem of sub prime borrowers was limited to poor, financially foolish individuals who dreamed of owning their own home. Or they thought it was limited to speculators trying to make a quick buck-flippers. Even Republican presidential candidate John McCain did not take the crisis seriously in late 2008, trying to reassure everyone by saying, "The fundamentals of our economy are strong."
Around the same time, another word crept into our daily conversation: bailout-saving our biggest banks from the same problems that faced subprime borrowers: too much dept and not enought cash. As the financial crisis spread, millions of people lost their jobs, their homes, their savings, their college funds, and their retirements. Those who so far have not lost anything are afraid they might be next. Even states felt the pinch: California Governor Arnold Schwarzenegger began talking about issuing IOU's instead of paychecks for government lawmakers because California, one of the biggest economies in the world, was going broke.
Now, as 2009 begins, the world looks to a newly elected presedent, Barack Obama for salvation.
Let's Discuss: Thinking back from the educational system. Where have you been taught something if anything about money and financial literacy? Also does this article show what the gold standard is and why it's abandonment in 1971 has impacted our current economic condition on a global basis? Also add any thoughts or question you might have...
