Did I ever tell you the story of the how the United States defaulted on the dollar? I don’t think I did… Did I ever tell you about how they did it twice? I don’t think I told you that story either, but you know what they say, “fool me once, shame on you, fool me twice, shame on me.” The US government fooled the world twice, and instead of learning our lesson, we came back for a third helping!
Most people will tell you that the US Dollar is backed by “the full faith and credit of the United States of America,” which is strange, because it doesn’t really mean anything. Moreover, that promise is only there but because the US went bankrupt and didn’t back up the dollar with what it promised, gold at $35 dollars an ounce. Or better yet, gold at $20.67 an ounce. That sounds crazy, no? Especially today, when gold costs $3379.70 an ounce.
Let’s back up a little. In 1834, Congress passed an act called The Coinage Act of 1834. It repriced gold and silver relative to each other, and most importantly set the price of gold at $20.67 an ounce. That remained the price of gold for the next 99 years. Subsequently, in the Gold Standard Act of 1900, the government required itself to give one ounce of gold to anyone who brought $20.67 to the US Treasury, or any of the Sub-Treasury branches, which were found in most major cities like New York, Chicago, San Francisco, Boston, and of course, Detroit.
But then The Great Depression happened, and FDR wanted the government to spend a lot of money to get us out of depression, but he couldn’t because if he just printed money, and money became more plentiful, people would bring it to the bank and ask for gold and there wasn’t enough gold…
So, in 1933, FDR issued Executive Order 6102, which made it illegal for US Citizens to “hoard gold,” which basically meant that all Americans had to come and forfeit their gold to the US government in return for $20.67 an ounce. They were allowed to keep a small amount for jewelry, dentistry, industry, or collectibles, but the rest of the gold held by citizens was required to be handed over; failure to do so was punishable by fines of up to $10,000 (about $250,000 today), ten years in prison or both.
The vast majority of Americans reluctantly gave up their gold. The US government collected about 210 million ounces of gold from citizens and institutions, estimated to be over 90% of privately held gold. People really didn’t want to spend ten years in prison. And besides, they were getting $20.67 per ounce, so it wasn’t that bad. But then in 1934, immediately after collecting the gold, the US passed the Gold Reserve Act, which repriced the gold at $35 an ounce. Essentially, people were looking at the money in their bank accounts and realizing that the dollar amount they received for five ounces they gave up, $103.51, wouldn’t even buy them three ounces anymore if they could even buy gold.
People who worked hard their whole lives and saved up in gold, suddenly found that the United States dollars in their bank accounts were worth about 41.4% less! What a magic trick the United States had played on them! It got them to give up their hard-earned gold, and gave them dollar bills and then made those bills worth 41.4% less! Now the US had the ability to print more money, because they had all the gold, and you know what the Golden Rule is; “He who has the gold, makes the rules.” Despite the deep anger of the American public who had been forced to give up their gold for dollars that were deliberately crashed, the US Government had a monopoly on the laws, the courts, the guns, the police, and the prisons, so no one had much of a choice.
If your neighbor forced you to give them your gold at gunpoint and then gave you something worth much less in return, they would be put in prison for theft. When the government does it, it’s the law.
But the story doesn’t end there. The next chapter takes place in a small sleepy town in New Hampshire, known as Bretton Woods. In 1944, WWII was playing out in full fury on both the Pacific and European fronts, but it was pretty clear that this war would eventually be over and the US on the winning side. Dozens of nations were already thinking about what rebuilding would look like, and they knew they without a proper global banking system, the world would be in chaos for decades. Financial shenanigans committed by national banks in the 1930’s known as “beggar-thy-neighbor” policies were deeply intertwined with the anarchy in Europe leading to up to WWI, and there had to be a better way to run the world economy which was only globalizing and becoming more interdependent.
So the US invited members of all 44 allied nations to a conference at the prestigious Mount Washington Hotel in Bretton Woods, NH, to hammer out a system. From July 1, 1944 to July 22, 1944 over 730 economists, financiers, and government delegates discussed, debated, and deliberated, what the proper system would be. The US made what seemed like a great offer. They recommended that the dollar should be the global reserve currency, meaning that all over the world, people would trade using the same currency, making trade much easier and faster than a world where everything had to be priced in multiple currencies that were constantly changing. On top of that, they promised to keep the dollars pegged to gold at $35 an ounce so that the dollar would be stable. All the other currencies could be adjusted compared to the dollar based on how much gold other countries had.
This way, the whole world would essentially be forced to keep their currency in line with gold. People and countries needed to trust that their currencies would hold their value. The Weimar Republic of Germany saw the price of a loaf of bread go from 250 marks in January of 2023, to 250 billion marks by November of that year. The Polish mark had exploded in the 1920s due to hyperinflation and had to be replaced by a whole new currency, the zloty. The Austrian Krone was inflated by 14,000% from 1914 to 1922, and had to be replaced by the schilling. Everyone at the Bretton Woods Conference wanted stability to replace the chaos and the US proposal seemed reasonable.
The US held over 20,000 tons of gold, well more than half of the known gold in the world, (remember they forced the citizens to “give up their gold” and collected about 6,2000 tons from that operation). The US was also the only superpower in WWII that didn’t have its heartland devasted by the war, so it was able to produce tremendous amounts of goods which it sold to all the ravaged countries in return for their gold. And when the United States promised to only print dollars to match the gold they had in reserves at a rate of 35:1, the world believed them and signed the Bretton Woods Agreement. (The Bretton Woods Agreement also included the formation of the International Monetary Fund and the precursor to the World Bank, but it’s out of the scope of todays email.)
All seemed to be going well, the world rebuilt throughout the late forties and fifties, but as the sixties rolled around, nations started getting nervous. It sure looked like the US was printing money without any gold to back it! The US started running trade deficits which meant that they were buying more than they were selling. They were also spending billions of social programs introduced in the 60s, and spending billions more on the war with Vietnam. How did the US have so many dollars if they didn’t have much more gold? As a matter of fact, foreign countries held more US dollars than the value of all the US Gold Reserves. Everyone knew the US had reneged on its promise not to print dollars without the gold to back it.
European countries starting demanding gold at $35 an ounce, per the Bretton Woods agreement, and the US was giving it, but they just kept asking for more gold, and sending it back home. By 1971, the US gold reserves were down to just 8,100 tons. On August 15, 1971, President Richard Nixon addressed the American people and explained to them that in order to stop “speculators” who were trying to derail the economy, the US would “suspend temporarily the convertibility of the dollar into gold.” This meant that the US would no longer give gold for its dollars, not at 35:1, not at any number. The price of gold jumped to $128 an ounce by 1974, more than quadrupling in three years.
Once again, Americans who saved their whole lives in dollars saw the value of those dollars plummet. But not just Americans, this time nations around the world were holding onto billions in US dollar reserves, based on promises made to them by the US, and the value of all them had dropped out as well.
So what props up the value of the dollar today? Nothing really. That’s why it’s called a fiat currency, it’s only valuable based on the decree, the fiat, of the United States. People say that the US dollar is the most reliable currency, but the one thing reliably does is lose value. Every single year since Americans had their gold seized, the US dollar becomes worth less and less (with the exception of 2009! Different conversation for a different time). If you held a $100 from 1933 to today, it would only be able to buy you about 4% of what it bought then.
Unfortunately, Americans keep falling for these shenanigans. After it became clear that no one wanted to hold the slowly melting ice cube called dollars, the next big scam was the bond market. Americans were taught that the US bond market was the safest place to be, and as you get closer to retirement you need to change your portfolio blend to reflect much more bonds and less stocks because stocks are too risky. You can’t take a chance of losing a lot of your money when you’re close to retirement.
But then the pandemic happened and the US started printing money like a drunk sailor, pushing 5 trillion out of the door like it was nobodies’ business. Unfortunately for us, it is all of our business. When there are more dollars being printed, those dollars become less valuable, and real things become more expensive. (If there are $100 and 100 apples, an apple will sell for $1. If suddenly there are $200 and 100 apples, an apple will sell for $2, apples didn’t get more expensive, dollars became less valuable.) Dollars became less valuable, inflation rates skyrocketed and no one wanted those bonds that promised to pay 2% when inflation was 9%.
People who had worked hard for years and put their money into the stock/bond retirement portfolio, and weighted it to bonds as they got older, suddenly saw their bonds lose 20% in a few years, and specifically when they were to old to go back to work. This was everything they were depending on for their decades of retirement, and to their horror they watched their retirement accounts take massive hits. The US had once again played the people. The everyday man works hard his whole life, saving in dollars or US treasury bonds, the government assures him the “the full faith and credit” of the government, the government spends money without any accountability, and the everyday man keeps eating heaping platefuls of crow.
Which of course reminds me of the statements of King David in the Book of Psalms, (118:8-9), “It is better to take shelter in the Lord than to trust in man. It is better to take shelter in the Lord than to trust in princes.” And further Kind David tells us (146:3), “Do not trust in princes, in the son of man, who has no salvation.” This is King David telling us that no one can take care of you other than G-d. Not the US Government, not the corporation you work for, not the stock market, not bitcoin, not commodities, not real estate, and not even a hidden cache of diamons. As King David tells us Psalms (145:16), “You open Your hand and satisfy every living thing [with] its desire.”
Not only is there no one you can rely on to take care of you other than God, not only will your own government bankrupt you again and again for their own benefit, not only is there no asset you can hold that will guarantee you anything, but most importantly, no one is taken care of outside of G-ds hand. Every living entity is satisfied out of the hand of G-d.
Whether you’re a farmer who grows corn or raises cattle, that corn produces ears of sweet kernels by converting sunlight into food a miracle of the highest order, and the cow produces meat and dairy by eating grass, another miracle of the highest order. And if you’re an accountant and are able to sit in front of a computer all day and then after two weeks someone gives you a check that enables you to buy meat, dairy, and corn, that is also a miracle of the highest order.
So when we eat, when we climb into our comfortable beds, when we get dressed, or when we sit at work, let’s remember to thank Hashem as often as possible. In English, in short form, in Hebrew, in long form, in any way we can, because He takes care of us, in every way we need!
Parsha Dvar Torah
In this week’s Torah portion we find the Jewish people preparing for battle with the Midianites who tried a few devious strategies to destroy them. G-d commands Moshe to draft men for the army:
“A thousand from a tribe, a thousand from a tribe, for all the tribes of Israel shall you send to the legion.” (Num. 31:4)
The obvious question is why G-d repeats Himself in this commandment. The Sages tell us that there were actually two separate drafts, one for people to go to the front line to do physical battle, and one to go to the study halls to do spiritual battle. We are a people whose battles never smack of the ordinary. As Ben Gurion commented on Israel’s miraculous victories in the Arab-Israeli conflicts, “Anyone who doesn’t believe in miracles is not a rationalist.” Those battles are not only won due to the physical strength of the soldiers, but also due to the Jewish people’s prayers and Torah study on their behalf.
In WWII, the Germans soldiers under Rommel, the “Desert Fox,” were pushing through North Africa with lightning speed, shrugging off all opposition as if it was nothing more than a pesky fly. Their sights were set firmly on Palestine, and they were confident of victory. Hitler had already met with the Grand Mufti of Jerusalem to plan the slaughter of Jews in Palestine, so certain he was of success. With German troops less than a hundred miles from Palestine, it appeared that the Jews were doomed.
The Jews in Jerusalem called a community-wide week of prayer and fasting. All the men, women, and children of Jerusalem’s Old Settlement streamed into the synagogues and cried their hearts out to G-d to avert the impending perdition. The very day after they concluded their fasting, a relatively inexperienced British general, Bernard Montgomery, began a drive that forced Rommel and his forces to retreat all the way to Tunisia.
That battle showed the power of the Jews unconventional weapon, the spiritual one they first learned of in this week’s parsha. Since then, Jewish success in battle has always depended on having “a thousand from a tribe, a thousand from a tribe.”
Today, Israel is still in trouble. Hamas is holding 50 hostages, only 20 of whom are assumed to be living, but this makes it very hard to fight Hamas because the IDF needs to avoid the hostages or any attack that could hurt them. Iran may have taken a walloping but anyone who thinks they are not back at work trying to make a nuclear weapon is not reading the room. We feel helpless, watching the Anti-Semitism rise all over the world, starting on college campuses and spreading throughout the populace. What can we do?
This week’s parsha teaches us that we can do something. If we can’t join the fighters on the physical front line, we can certainly join the fighters on the spiritual front line. While they guard Israel with F-16s, tanks, and laser guided missiles, we will join the Israeli Defense Force from the Spiritual Front. We can redouble our efforts to pray for the peace and safety of our people. We can realize that the words coming out of our mouths, when uttered in sincerity and focus to Hashem, have more power than rockets and explosives. I can defend Jews around the world, you can defend Jews around the world, it’s our job to be the Spiritual Iron Dome for our people.
As King David, one of the greatest warriors in Jewish history proclaims, (Psalms 20:8-10) “Some trust in chariots, and some in horses; but we will call out in the name of the Ha-shem our G-d. They kneel and fall, but we rise and gain strength. O Lord, save us; may the King answer us on the day we call.”
Parsha Summary
This week we read two Parshios, Mattos and Masei. Mattos starts off with the laws of nedarim, strong spiritual vows. While many people may feel that vows are simply words, and therefore shouldn’t be taken too seriously, in Judaism we believe the opposite to be true. We see the human being’s greatest asset to be that which is shared with no other species, his faculty of speech. The verse in Genesis describing Adam's creation says "and He blew into his nostrils a soul of life” (Genesis 2:7) Onkelos translates it as "and He blew into his nostrils a talking spirit," thus indicating that speech is the very essence of the human. Everything a person utters with this gift of speech should be taken seriously, especially when it is said as a vow. However, there are situation in which one can nullify a vow. These include a person who goes to one expert or a court of 3 people, who can nullify the vow under certain circumstances, a wife who makes a vow which will affect her husband in which case he can waive it, or a young girl who makes a vow and her father annuls it.
The parsha continues with the Jews going to war with Midian to avenge the people who died as a result of the abhorrent trap the Midianites had set for them involving base immorality and idol worship. G-d tells Moshe that after this war he will die, yet Moshe immediately works on gathering the troops. The Jews on the other hand, have to be coerced to raise the troops, as they don't want to see Moshe depart from the living. The Jews are victorious in battle and the Torah goes into detail on the splitting of the spoils. In summary, of the living spoils (sheep, donkeys etc.) half went to the soldiers with1/500 being given to the Kohanim. The other half went to the whole nation, and 1/50 was given to the Levites. You might be wondering, why did the rest of the nation got spoils if they hadn’t gone to war? Well, it is important to note that in Judaism we view ourselves as one unified nation. Not only are the people in the front lines fighting, but those back at home praying and learning in their merit are also considered to be fighting the battle. Therefore, it was only fair that they should get a share of the spoils. This is an extremely important lesson right now, as our soldiers in Israel are fighting bravely on two fronts. We don't need to feel helpless as we watch the news; we can also pitch in and fight from our homes here in the USA! If we take an additional ten minutes a day to say psalms for our soldiers or learn in their merit, we are taking an active and crucial role in the war and in saving our brethren.
The last part of the parsha is the story of Reuven and Gad's request to remain east of the Holy Land where the land was good for grazing. See the above Dvar Torah for the details.
Parshat Massei, being the last parsha in Numbers, is the wrap up of the Jews’ time in the desert, as the story part of Deuteronomy focuses almost exclusively on the last day of Moshe's life. Therefore, Massei starts with recounting every station the Jews camped at throughout their 40 years in the desert, and some of the events that happened at these spots. Then, the Parsha focuses on the future - on the conquest of Israel. G-d commands the Jews to destroy all forms of idols when they conquer the land, and to distance themselves from the inhabitants them so they don’t get enticed to sin (as we saw in the Dvar Torah, the three most important things about where we live are neighbors, neighbors, and neighbors!)
The Torah then delineates the borders of Israel, and names the leaders who would lead each tribe when they entered the land. After that, the Torah commands the people to set aside cities in which the Levites would dwell. The Levites weren't given any specific portion of Israel because their job was to spiritually motivate and to teach the people. Therefore, they were scattered amongst the people so that everyone could have some good neighbors. The Torah also commands the people to set aside cities of refuge to which people can flee if they commit unintentional murder. Although they can't be held fully responsible, they are somewhat at fault because they could’ve avoided it by being more careful (in American law this is called negligent homicide). Therefore, they must run to a city of refuge and remain there until the death of the Kohen Gadol.
This is clearly not a good thing for the Kohen Gadol, as it meant that many people were eagerly anticipating his death so that they could return to their families. The Talmud teaches us that the Kohen Gadol is given this weighty burden because he should have prayed harder that there be no accidental killers on “his watch,” and he didn’t. This shows us how much the Torah expects Jews to feel responsibility for one another.
The Parsha (and the book of Numbers) concludes with the people of the tribe of Tzelophchad coming to Moshe with a concern. In last week's parsha, Tzelophchad's daughters came to Moshe to ask for a portion of the land, since their father had died and left no sons to inherit him, and Moshe agreed that they would get it. Now, the people of that tribe were concerned that if the daughters would marry men of a different tribe, the land would end up being lost from their tribe, since it would go to the husband's tribe. Moshe then told the women that they should choose mates from their own tribe to alleviate this problem. This law only affected women receiving inheritances who were among the first generation which was apportioned the land of Israel, so that there should at least be one moment where each tribe had exactly the portion they received. Later, people could choose a spouse from any tribe, as long as they loved each other and cared about one another through sickness and health, poverty and wealth etc. etc. That's all Folks!
Quote of the Week: Learn as if you were going to live forever. Live as if you were going to die tomorrow. ~ Gabbai Yelnats
Random Fact of the Week: An alligator can run as fast as a horse for very short distances.
Funny Line of the Week: I totally take back all those times I didn't want to nap when I was younger.
Have a Remarkable Shabbos,
R" Leiby Burnham