Money Creation Since 1914
Posted July 11, 2024
Congress ended the requirement that the Federal Reserve hold Gold to back the Money it created in 1968. Afterward, there were no longer any constraints on how much Money the Fed could create.
During the five and a half decades that have followed, the Fed has created Money on an increasingly astronomical scale.
The ability of the Fed to create limitless amounts of Money fundamentally changed the nature of our economic system.
It is the principal reason that Capitalism evolved into Creditism.
The latest Macro Watch video, uploaded today, provides a history of Money creation by the Fed by comparing the amount of Money the Fed created over eight consecutive periods:
- 1914 to 1920: World War I
- 1920 to 1930: After The War
- 1930 to 1941: The Great Depression
- 1941 to 1945: World War II
- 1945 to 1971: The Bretton Woods Era
- 1971 to 2007: After Gold
- 2007 to 2014: The Crisis Of 2008
- 2014 to 2023: The Covid Pandemic
The video discusses the rationale for the Fed’s actions during each of these periods.
It describes the developments that made it impossible for the Fed to continue backing Dollars with Gold after 1968.
And it illustrates the mind-boggling expansion of the Fed’s power once it was free to create as much money as it pleased. For instance, in 1971, the year the Bretton Woods International Monetary System collapsed, the Fed created $9 billion. In 2020, the Fed created $3.2 trillion, 356 times more than in 1971.
The power to create Money on a multi-trillion-dollar scale makes the Fed the US Government’s most potent economic policy tool and the world’s most powerful economic institution.
Our economic system works very differently now than it did when Money was backed by Gold. The new Macro Watch series, Creditism 101, clearly explains the reasons behind this transformation in order to reveal the forces driving the economy and the financial markets today.
This video is the fourth in this series.
Macro Watch subscribers can log in and watch this video now for all the details.
This video is 20 minutes long and contains 46 slides that can be downloaded.
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CLICK HERE to see a list of my books, which document the evolution of Capitalism into Creditism.
A new video will be added approximately every two weeks.
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