The question posed above has been debated for decades by American economists, financiers, politicians and concerned citizens around the country.
According to New Economic Perspectives, a global markets information website, the root of the query dates back to 1971, when President Richard Nixon ended the fixed price of gold trading. Until then, gold had been the anchor on the U.S. dollar, although this relationship became unstable when, during the 1930s, President Franklin D. Roosevelt outlawed private gold ownership. With the dollar no longer tied to a commodity, it entered a period of unprecedented value loss that continues to this day under the name "inflation."
Currency strength or weakness is hard to determine in economics, states The Daily Reckoning, a finance e-newsletter, in a recent publication. It's a phenomenon witnessed in fiat currencies – those without a hard asset anchoring, like the U.S. dollar – and has been remarked upon and discussed for centuries, going as far back as the Roman Empire when their major denomination, the denarius, began to drop in value due to silver debasement.
Hyperinflation – the rapid loss of value due to a massive influx of currency supply – is a runaway effect that often heralds the end of a fiat currency. The German mark was a victim of this problem in the 1920s as the Weimar Republic's economy collapsed and its central bank printed bills to spur market activity. According to the source, the mark-to-dollar exchange rose from a ratio of 12-to-1 in April 1919 to 4.2 trillion-to-one in December 1923.
In our next article, we'll continue to look at the issue of fiat currency in modern. There are concerns among economists that the U.S. dollar may be threatened by the same forces that impaired and ultimately destroyed the the Roman denarius and the German mark. Stay with GreatWealthStrategies.com for more news and information related to investment, wealth preservation and retirement.