"The way to crush the bourgeoisie is to grind them
between the millstones of taxation and inflation."
-- Vladimir Ilyich Lenin
(1870-1924), First Leader of the Soviet Union

Debt & Inflation:

The Story in Pictures

America's modern inflation is created by the Federal Reserve when they issue money backed by government debt.  This system is known as a "debt-backed" or "fiat" currency system in which governments issue debt for people to use as money.

The U.S. debt level has climbed sharply since the Federal Reseve was created in 1913, to almost $9 trillion (as of year-end 2005, up $2 trillion just since mid-year 2004), over 100% of our annual GDP!

Source:  U.S. Treasury, Bureau of the Public Debt

As a result, our competition, the U.S. Federal Reserve Note (the "dollar") has lost 96%+ of its purchasing power since 1913!  If $1 dollar bill was worth one whole dollar in 1913, as of 2001 that same one dollar is only worth 4 cents of that 1913 dollar!  (Source: U.S. Dept. of Labor, Bureau of Labor Statistics, CPI)

On the other hand, silver has held its value very well and has even increased some years.  If a 1913 U.S. silver dollar was worth 1 whole dollar, that same silver dollar (not considering collector value, just monetary value) in 2001 was worth $0.34 with a high in 1977 of $3.79.  Would you rather have declining money like the Federal Reserve dollar or stable money like silver?  (Source:  Kitco.com historical price data)

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