The Federal Reserve Has Been Slow-Motion Hyperinflating for 97 Years

By: Jeff Berwick | Tue, Aug 17, 2010
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The Federal Reserve and the concept of central banking is one of the biggest scams ever perpetrated in human history. Yet, even to this day, the great majority of people still do not see this reality. In fact, the average man on the street has no idea what central banks even do, what today's "money" actually is and how it is created much less how they have been defrauding the lower and middle class for decades.

The main reason the average person is so clueless is because most people in the world today receive their "education" from the government: public schools. And the last thing the government wants you to understand is how central banks are a device of the financial elite to transfer wealth from the poor and middle classes to the rich.

The fraud is sitting right there in plain view to anyone who can open their own eyes and use their own brains yet it still goes largely unnoticed.


Take, for example, one of the main purported reasons for the Federal Reserve's existence: to "promote" stable prices. It says right on the Federal Reserve Bank of San Francisco's website that this is one of two main goals of the monetary policy which they manipulate ( The other goal, laughably, at a time when true unemployment as measured by is running at 22% in the US, is to "promote" employment.

Let's forget about employment for now. And let's even gloss over just exactly how it would be possible for any central agency to "promote" stable prices and employment. There is not one shred of evidence in human history that anything EXCEPT a completely free market can "promote" maximum employment and stable prices.

But let's just stick to looking at how well the Federal Reserve has done in their so-called quest to keep prices stable.


Prior to the founding of the Federal Reserve in 1913 prices in the previous century (1800s) had been very stable and actually declined from 1800 to 1900 as productivity increased. Yet, after the founding of the Federal Reserve the value of the US Federal Reserve Note (referred to by the people on the street as the US Dollar) has declined approximately 96% in the last 97 years when measured by the Consumer Price Index. That may not sound too bad until you realize that the maximum it could possibly decline is 100%.

However, we believe it is even worse than that. That only takes into account changes in the price of general retail goods. However, the last 97 years has been the most productive and amazing time in human history. We have gone from being a bunch of farmers to living in a highly technological age. If it weren't for this massive advance in productivity, we believe the US Dollar would actually be down much more than the 96% the data states for retail goods. And even that might be giving the Dollar too much credit.


By many measures $1 Dollar in 1913 is the equivalent to $1,000 today. In percent terms, a 99.9% drop.

Don't believe us? Let's take a quick look at the price of a number of different items. Over and over again ratios of 1000:1 reappear.

Take Yankee Stadium. Originally built in 1923 for $2.4 million. The cost to build its replacement in 2009? $2.3 billion. Almost exactly 1,000 times more.

How about the players themselves? Well, in 1901 the National League of baseball had a salary cap on player salaries of a maximum of $2,400. There is currently no salary cap in major league baseball but the average player salary in 2009 was $2.9 million. A ratio of 1208:1.

Or take the Titanic. The most expensive ship ever built at the time in 1912 it cost $7.5 million in US Dollars. Today, the most expensive ship currently being built is the Queen Elizabeth class aircraft carrier being built for the English Navy. The cost in US Dollars: $6.1 billion. The ratio: 813:1.


Another way to look at the change in the "value" of the Dollar is to look at the amount of money it takes to be wealthy. Not rich, as Chris Rock said (, but wealthy.

It used to be that millionaires were rich people. Now you need to be a millionaire just to be able to buy a decent house in any major global city. Just having a million dollars will barely get you a 1,000 square foot apartment in Hong Kong.

The amount of millionaires in the US in 1900 was approximately 4,000. Today there are 2.6 million millionaires in the US. Billionaires in 2010 are what millionaires were in 1910. Today there are approximately 1,000 billionaires in the world. And what is the difference, in ratio between a million dollars and a billion dollars? You got it, 1000:1.

Comically, nothing shows the ridiculous of the situation better than Dr. Evil in the Austin Powers trilogy:

Today a million dollars is nothing. Just a few days ago a Swedish motorist received a $1 million speeding ticket (

Now just one superstar athlete, like Lebron James, has Billion dollar earning potential. R&B singers and rappers can't rap about making millions anymore or they look like underachievers. Houston based rapper Chamillionaire is being inflated into obscurity while R&B singer Travie McCoy just released a song called "Billionaire" just to keep up with the times.

You need look no further than south of the US border to see where we are headed. In Mexico they have a lottery commercial regularly aired on TV called "Trillonario!" Ay mami!


Yet even though the US Dollar has collapsed, by many measures, by 99.9% in the last 100 years some people are still so blind as to think that deflation is a potential problem.

The con-men at the Federal Reserve have managed to keep the rate of hyperinflation just slow enough so that many people, even to this day, despite all the evidence around them, still don't see the obvious inflation and the destruction and transfer of wealth it precipitates.


All of this begs the question, what was the ratio of change in the price of gold over the last 97 years since the founding of the Federal Reserve?

Gold was $20.67 in 1913 and is currently trading at $1,220, a ratio of only 60:1. While far from scientific, if gold were to keep pace with the 1000:1 ratio of many other big ticket items it would have to rise by 16 times, to $19,520 USD per ounce.



Jeff Berwick

Author: Jeff Berwick

Jeff Berwick
Chief Editor
The Dollar Vigilante

Jeff Berwick

Anarcho-Capitalist. Libertarian. Freedom fighter against mankind's two biggest enemies, the State and the Central Banks. Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast, Anarchast. Jeff is a prominent speaker at many of the world's freedom, investment and gold conferences as well as regularly in the media including CNBC, CNN and Fox Business.

Jeff's background in the financial markets dates back to his founding of Canada's largest financial website,, in 1994. In the late '90s the company expanded worldwide into 8 different countries and had 250 employees and a market capitalization of $240 million USD at the peak of the "tech bubble". To this day more than a million investors use for investment information every month.

Jeff was the CEO from 1994 until 2002 when he sold the company and still continued on as a director afterwards until 2007. Afterwards, Berwick went forth to live on and travel the world by sailboat but after one year of sailing his boat sank in a storm off the coast of El Salvador. After being saved clinging to his surfboard with nothing but a pair of surfing shorts left of all his material possessions he decided to "live nowhere" and travel the world as spontaneously as possible with one overarching goal: See and understand the world with his own eyes, not through the lens of the media.

He went on to visit nearly 100 countries over four years and did and saw things that no education could ever teach. He met and spoke with a plethora of amazing people, from self-made billionaires to some of the brightest minds in finance - as well as entrepreneurs from a broad range of backgrounds and locations from tech companies in southern China to resource developers in Mongolia, Thailand, Russia and Chile. He also read everything he could find on how the world really works... politically and financially. A pursuit he continues to this day.

He expatriated, long ago from his country of birth, Canada, and considers himself a citizen of the world. He has lived in numerous locales since including Los Angeles, Hong Kong, Bangkok and currently lives in Acapulco, Mexico and is building a home in Cafayate, Argentina. In essence, everything he writes about here for TDV he has done or is doing.

As well, during his travels, both real and virtual (through the internet), he met some amazing people who have a similar shared vision of what is currently going on in the world and enticed them to come aboard TDV and provide their own brand of analysis.

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