The Little Book of the Shrinking Dollar: What You Can Do to Protect Your Money Now

How Does Money Printing Work?

Explaining how the Fed’s money printing destroys the dollar’s value is pretty easy. Consider a more physical, real example.

Back in the late 1800s, the island of Yap, tucked away in the Pacific Ocean, didn’t use dollars or pounds sterling, or gold of any kind. They used stones for money. Called rai, these limestone rocks don’t strike us as the simplest currency. The largest stones weighed many tons. Weight = value. Pretty simple, right?

Why were these stones worth so much? Not only were they heavy, they were brought from an island over 155 miles away. This perilous journey over rough seas wasn’t easy. Many stones were lost at sea, along with the men who carted them hence.

So the risk in procuring the money stones was the thing that gave it value. Added value came if many men died to get it, or conversely, if none died at all.

As you can imagine, the supply was very limited. And since they were so heavy, the Yapese had a hard time ripping off each other’s net worth.

All that fell apart in 1874. All it took was one savvy, shipwrecked Irish-American named David O’Keefe. He helped the Yapese to import whole shiploads of large stones far more easily than they could do in the past. He oversaw the importing of money, which he then traded for actual goods like sea cucumbers and copra.

So the Yapese were bringing thousands of stones to their island, debasing the value of their families’ inherited wealth.

Today, you can traipse around the island and still see ...