<Narrator> At TowHaul.

We value the creativity and hard work that built this country and improves our lives by supporting education towards careers in manufacturing and the trades.

TowHaul, proud sponsor of "Reconnecting Roots" and public television.

Support for "Reconnecting Roots is provided by the following: RPC.

♪ gentle acoustic guitar ♪ "Plain Values," a magazine on a mission to find joy in the simple things.

Muletown Coffee Roasters is all about slowing things down, digging into community, and encouraging good for goodness sake.

Taylor Stitch is responsibly built for the long haul and is proud to partner with brands that inspire hope for a more sustainable future.

Sharing a common passion for music and community in beautiful Paradise Valley, Music Ranch Montana's mission to support musicians and provide a place to enjoy it together is reflected in "Reconnecting Roots."

♪ upbeat music ♪ ♪ I need a dollar, dollar, dollar ♪ ♪ That's what I need, hey, hey ♪ ♪ Well, I need the dollar, dollar, dollar ♪ ♪ That's what I need, hey, hey ♪ <Gabe> From cold hard cash to tepid, brittle plastic.

<Ben Stein> The US, just by itself produced roughly half of the total world output.

<Gabe> How the dollar conquered the world economy and makes every nation green.

♪ ♪ opening music ♪ I'm Gabe McCauley.

Join me as we explore the greatness of America.

♪ Beautiful, for spacious skies ♪ ♪ Amber waves of grain ♪ ♪ Purple mountains majesties ♪ ♪ On the fruited plains ♪ ♪ We're home ♪ ♪ ♪ Home ♪ ♪ Home ♪ ♪ Home ♪ Tracing the roots of progress from then to now and how.

This is "Reconnecting Roots."

♪ We're home.

We're home.

♪ ♪ Hawaii, America's tropical haven.

Known for its blue waters, black sands, and grass skirts.

But in 1941, this island paradise was nearly lost in the devastating surprise attack on Pearl Harbor.

♪ menacing music ♪ As a safeguard against the very real threat of a full-scale invasion, our military pulled out a new weapon, Hawaiian money.

♪ Hawaiian money was the same American currency used anywhere else in the country.

Same printing, same value, only now with Hawaii stamped on each bill.

It could buy just as much poi and macadamia nuts as you could before, but you couldn't spend this cash anywhere else because the currency would've been declared worthless and unacceptable.

It's a story that highlights a few things about the US dollar, its symbol for American commerce, its power as an economic weapon, and it's just a piece of paper.

♪ It can make a lot of friends.

It can break a lot of families.

Some people live for it, and some people will kill for it.

Keep it, it loses value, let someone else keep it, and it multiplies.

(money rustling) Sound complicated?

♪ upbeat music ♪ The almighty dollar reigns supreme, not just as our currency here in the States, but as the backbone of world trade.

Many commodities sold on the global market like gold, oil, even coffee beans are priced exclusively in US dollars.

And recently as much as 88% of all international trade was based on the dollar.

Even 62% of the world's currency reserve is held in dollars.

All right, class.

The dollar is a unit of - anyone, currency in the United States of America.

And since the year, - anyone, 1913 has been used as, - anyone, Federal Reserve notes after the passing of what?

Anyone?

♪ music ♪ Anyone?

Peterson?

Fry?

♪ Bueller?

♪ music ♪ Anyone?

♪ <Ben Stein> Sir, sir?

<Gabe> Mr. Stein.

<Ben Stein> With the greatest possible respect, how many dollars would it take to get you to leave?

(Gabe sighs) <Gabe> That is none other than Ben Stein, the Emmy winning game show host, best selling author, and economist.

While you may know him as the teacher from "Ferris Bueller's Day Off" and "The Wonder Years", he is in fact a professor of economics and law who lectured at UCLA and Pepperdine.

<Ben Stein> The dollar is a store of value and a medium of exchange.

The two world wars in Europe just really, really wrecked the European currencies.

The US alone emerged stronger, in the early 50s, the US just by itself produced roughly half of the total world output.

The US was a very, very, very powerful economy.

Even people in the US who were considered in poverty and eligible for food stamps and federal relief of various kinds are very well off compared with, say, working class people, even in industrial countries.

<Gabe> What do you think has allowed that abundance here in America?

<Ben Stein> Extremely hard work, a very good tax system for a long time, a free enterprise society.

I mean, there's no possible system that allows for wealth to be created as fast and to be dispersed as widely as the free enterprise system.

<Gabe> So, you see the US dollar continuing to hold that amount of power?

<Ben Stein> The dollar is it because the dollar is the unit of currency of the dominant economic power in the world.

♪ ♪ bright music ♪ (coins chinking) ♪ I see your bet.

♪ I raise you four clams and a couple bucks.

♪ Currency comes in many forms, but one our dollar has come to rely on as representative money.

When what you have isn't of any actual value, just a stand in for something that truly is, like a blue chip or green piece of paper.

This first caught hold in France when a Scottish fugitive and a French nobleman took a gamble on other people's wealth.

<Outlaw> I bet you we could start a bank with less cash than what's on the table here.

<Duke> A bank with no funds?

How would you even do this?

<Outlaw> With notes.

Paper notes.

And your influence, of course.

We'll accept deposits in exchange for currency.

Then when they want their gold or silver back, they bring back their currency.

Meanwhile, we use that currency to finance debt guaranteed by a stockpile no one will ever come to claim.

<Duke> Ridiculous.

No one will ever go for that.

♪ I accept your wager.

♪ upbeat music ♪ ♪ I've got the brains, you've got the looks ♪ ♪ Let's make lots of money ♪ ♪ You've got the brawn, I've got the brains ♪ ♪ Let's make lots of ♪ (music stops - animal growls) (Outlaw gasps for air) <Duke> And what happens when someone comes to call this bet?

<Outlaw> Never happen.

<Duke> Oh, oh, oh, oh.

<Gabe> Holding large deposits while floating smaller units of paper currency is what's called fractal reserve banking.

♪ As long as there's something in the bank, it should work.

♪ The history of America is rooted in the search for riches.

From Christopher Columbus seeking new trade routes to Spanish conquistadors on a quest to El Dorado, the lost city of gold.

To find the origins of the dollar, you have to go back to New Amsterdam where Dutch traders made the deal of a millennium with the Canarsee tribe by exchanging an assortment of sundry items, including some Venetian glass beads, and getting Manhattan Island in the bargain.

Maybe it wasn't the best deal for the natives long term, especially considering it was the Wecquaesgeek tribe who owned it.

But being in the wampum business, the trade was made with a commodity the Canarsee tribe valued.

Commodities have practical value for their usefulness, like fur and spices.

Later, the Dutch traded with other colonies in daalders and created a trade outpost that would eventually become the home of the New York Stock Exchange, the hub of international finance.

♪ You may know him for his fat rhymes, sick beats, and ponytail, but Alexander Hamilton, the first Secretary of Treasury, set up the Bank of the United States to establish a line of credit with the government.

Like any other bank, it relied on having some amount of actual cash on hand.

Back then, silver dollars were in circulation.

♪ The problem was, they were Spanish.

♪ Coins were preferred currency, and in very large amounts, bullion.

Cold hard cash like this is called specie, a tangible unit of money with intrinsic value, meaning it's made of something valuable on its own.

♪ upbeat jazzy music ♪ Congress created the US Mint, to strike our own currency from gold, silver, and copper to stabilize trade and taxation.

A system of credit allowed banks to operate as long as there was actual metal to be redeemed for every check or bank note.

♪ If there was no actual cash in the bank, well, that creates a problem for everybody.

(police sirens wailing) ♪ In 1861, Abe Lincoln couldn't get a bank loan to finance the Civil War without paying up to 36% interest on the debt.

♪ So Treasury Secretary Salmon Chase, the Chase Manhattan guy, started printing paper money.

This was the first time paper money had been printed by the federal government due to the failure of continental dollars issued during the revolution.

♪ At first, these demand notes were redeemable in silver or gold, but supplies ran thin, so they stopped backing the notes with specie, instead giving them a decreed value.

This is known as fiat money, meaning it's worth what the government says that it's worth, without being linked to a physical good like precious metal.

It was then that Secretary Chase approved the inscription "in God is our trust" and well, you need a little faith that fiat money doesn't suddenly become worthless.

President Lincoln was said to have suggested a more earnest biblical phrase "silver and gold, have I none.

But such as I have, give I thee".

In 1869, after the country was reunited, paper money was returned to buy metallic backing and the modern era of our dollar bills began to take shape into the familiar foldable forms we know today.

♪ (tape rewinding) ♪ ♪ upbeat music ♪ ("For the Love of Money") ♪ ♪ Money money money money, money ♪ ♪ Money money money money, money ♪ ♪ Money money money money, money ♪ ♪ Money money money money, money ♪ ♪ ♪ upbeat music continues ♪ ♪ ♪ People don't let money, don't let money change you ♪ ♪ ♪ Almighty dollar, keep on tellin' you ♪ ♪ Keep on all that money, don't let money change you ♪ ♪ ♪ Almighty dollar ♪ ♪ 'Cause it will keep on ♪ ♪ changing, changing up your mind ♪ ♪ It will keep on It will keep on ♪ ♪ Changing, changing up your mind ♪ ♪ I'm just tellin' y'all ♪ ♪ People don't let money, don't let money change you ♪ ♪ Almighty dollar, I keep on tellin' y'all ♪ ♪ People don't let money, don't let money change you ♪ ♪ ♪ Almighty dollar, 'cause it will keep on ♪ ♪ Changing, changing up your mind ♪ ♪ Silver always came in second place to gold in the monetary system.

And since it was seen as more expendable, people spent their silver money to hoard their gold.

<Coin> Who-hooo This was bad for the financial system, which relied on having gold in circulation.

At the start of the 20th century, the treasury moved away from silver dollars and began the exclusive gold standard.

The shift to gold only made the dollar less flexible, but also forced it into better circulation and gave more stability.

But it didn't prevent financial bubbles, at least not by the terms of the laws dictating the conversion rates.

And it certainly didn't prevent bubbles from bursting.

(bubbles popping) Following both the panic of 1893 and the bank panic of 1907, President Woodrow Wilson signed the Federal Reserve Act into law.

This new banking system consisted of 12 regional federal reserve banks spread across various states overseen by a board of directors in Washington DC.

They believed that this new system would help rectify the shortcomings of the central bank model by focusing on accountability by committee.

But in 1929, when the stock market crashed, the Federal Reserve Act could not prevent the panic leading to the Great Depression.

(crowd yelling) <Outlaw> What's going on here?

(crowd shouting) <Gabe> It's a run.

It's a run on the bank.

(crowd yelling) <Duke> Everyone is in a panic trying to redeem their paper.

(crowd shouting and yelling) <Outlaw> Well no wonder.

Calm down!

Calm down!

(crowd shouting) You're thinking of this place all wrong as if we got the gold back in the safe.

(crowd noise) <Duke> It would appear that fate has called your bet.

(Duke cries) <President> Nothing to fear.

Nothing to fear.

♪ I think I can solve this solvency problem.

I am ordering a bank holiday.

Come back another day and all your deposits will be safely insured by me.

Yes, thank you.

Yes, and may God bless America.

♪ <Duke> Thank you Mr. President.

<President> All right boys, here's the deal.

I save that gold and now I'm going to keep it safe in my vault in the middle of Kentucky.

You understand?

♪ All right, then don't just stand there.

Load this loot up so I can get out of here.

<Gabe> After President Franklin D Roosevelt issued orders to Americans to surrender their gold coins, bullion, and certificates to the government, the dollar was no longer redeemable for gold.

Keeping gold money became criminal, so silver came back into backing dollars for the next three decades.

Meanwhile, the treasury raised the rate for gold to $35 per ounce, attracting international investment in the dollar and swelling America's gold reserves dramatically, leading to the construction of Fort Knox.

<Announcer> At Bretton Woods, New Hampshire, delegates from 44 allied and associate countries arrived for the opening of the United Nations Monetary and Financial Conference.

<Gabe> The Bretton Woods Agreement resulted in making the dollar the de facto world currency.

Nations around the world were ready to use American dollars backed by the gold holdings amassed in Fort Knox.

The agreement pegged international currencies to the dollar, which was pegged to the value of gold, locked in at $35 per ounce.

The world, rebuilding after war, was now banking on America, until there was a run on the bank.

Mounting fiscal pressures combined with foreign economies gaming the system threatened to empty America's gold vaults, until President Richard Nixon put forward a bold new economic agenda.

<President Nixon> I have directed Secretary Connally to suspend temporarily the convertibility of the dollar into gold or other reserve assets except in amounts and conditions determined to be in the interest of monetary stability and in the best interest of the United States.

<Gabe> Nixon severed the dollar's ties to gold, effectively converting the international monetary system to fiat money.

The effects of this and other policies was called Nixon Shock for its effects both home and abroad.

The US saw some of its highest rates of inflation during the 1970s as the dollar lost a third of its value as prices on consumer goods more than doubled.

♪ What is it that was so shocking about this thing people call Nixon Shock?

>> It was a very big change.

I don't think there had been a change of that magnitude since the beginning of the Franklin Delano Roosevelt administration.

<Gabe> Apart from acting and lecturing, Ben Stein is also a pundit who served as a speech writer for President Richard Nixon.

<Ben Stein> There were wage price controls announced there, and so that was a tremendous shock, and actually I know that part of it quite well because my father was in charge of that.

<Gabe> Ben's father, Herbert Stein, was the chairman of the Council of Economic Advisors during both the Nixon and Ford administrations.

The elder Mr. Stein was there to oversee the final severance of gold from the dollar.

<Ben Stein> At some point, there was a crisis meeting of the cabinet because the Belgians had accumulated an enormous number of dollars.

I don't know what they explored from Belgium, besides chocolate, but anyway, maybe waffles, and they were saying we were gonna demand to exchange these for gold which would've just about wiped out our gold supply.

Almost every mainstream economist in America said it's time to decouple the dollar from gold.

People will value it for itself in a free market.

People yelled and screamed about it for a while, but we adjusted to it quite quickly, and as circumstances developed, the dollar became either more or worth less in the way of Pounds or Francs and now Euros, of course.

So the dollar worked out perfectly well when floating and adjusted just by the force of supply and demand.

<Gabe> Do you think there's ever gonna be a way that anyone can win your money again?

<Ben Stein> I don't think so.

♪ <Gabe> Inflation's the bane of the dollar.

Occurs in our national economy as well as the global economy.

Because of so many variables at play, inflation can quietly reduce the value of the money in our bank accounts without us even realizing, meaning our income, typically a fixed rate, doesn't hold its purchasing strength against the fluctuating prices, but that doesn't stop us from spending weaker dollars to buy more stuff.

It's what I call the plastic standard.

♪ Just like the Fed prints out easy money, the average citizen now easily spends money he doesn't have.

The number of families keeping a balance on consumer credit steadily rose from a low 6% in 1970 to 37% in the 90s.

In that time, revolving credit, mostly in the form of credit card debt, multiplied by 113 times.

Today's average credit card balance is around $6,000.

♪ <Girl> Sorry.

♪ >> Today, over 39% of US consumers have a mobile wallet and three out of 10 admit they don't even use cash during a typical week, especially with e-commerce making up so many transactions.

♪ (Gabe slurps and clears throat) Excellent.

With peer-to-peer payment apps, you can easily pay your half of the rent or split the check at dinner without having to carry around wads of cash or worry about bouncing checks.

But what about payday?

Is there something besides the dollar we can be compensated with?

Well, the answer is yes.

It's called cryptocurrency.

<Announcer> I know what you're thinking, E-commerce, cryptocurrency, it's pretty confusing, right?

Maybe even a little boring.

So to help explain, here's Academy Award nominated actress Margot Robbie in a bubble bath.

<Gabe> Cryptocurrency is a digital- <Announcer> Hold on.

Where's Margot?

<Gabe> Uhhh... Yeah, she was unavailable.

Cryptocurrency is a digital asset designed to work as a secure medium of exchange with a decentralized system for verifying transactions to help prevent fraud or counterfeiting.

The system doesn't require a central authority, which is just a fancy way of saying the government can't control its supply or currency.

Even the NFL is tackling this trend, which could make the coin toss tricky.

As of 2021, many players were opting for contracts paid out in Bitcoin instead of dollars.

♪ All right, uh... you can leave now.

During the Great Depression, local currencies and scrip were created to revive local businesses.

Even local governments paid their employees in scrip.

In Tenino, Washington, wooden dollars first printed in 1931 have made a comeback printed on the original antique letter press.

The new Tenino wooden dollars are issued as a part of a program to help those in need.

Residents can apply for a monthly stipend of 300 wooden dollars that can only be spent in Tenino.

Also stimulating the local economy.

♪ Without being tied to a true backing standard, keeping currency stable is an ongoing challenge.

Stakes are high and always seem to be getting higher, ♪ but if you can keep a straight face, ♪ you can stay in the game.

Maybe even win a few hands.

Just try not to bet against the house if you don't have to.

♪ I call <Outlaw> Oh, great.

Not again.

<Duke> You have lost the last of our money.

<Outlaw> Then we'll do what we always do.

We double down.

(Duke laughs) ♪ upbeat music ♪ (evil laughing) ♪ upbeat music continues ♪ ♪ <Gabe> While our currency may have gone from metal to paper to silica, our dollar today is backed by the promise of America, that enables each of us to share our prosperity around the globe, only for as long as we're still able to make good on that promise of liberty.

Until then, the world is banking on us.

Thanks for watching.

♪ upbeat music ♪ ♪ ♪ 15 cents is all I got, a dollar is all I crave ♪ ♪ ♪ 15 cents is all I got, a dollar is all I crave ♪ ♪ ♪ I brought nothing into this world ♪ ♪ And I take nothing to my grave ♪ ♪ ♪ Wish I had all the money in the world ♪ ♪ To buy what I don't need ♪ ♪ I wish I had all the money in the world ♪ ♪ To buy what I don't need ♪ ♪ ♪ 15 cents is all I have, and people gonna call me greed ♪ -y ♪ ♪ A dollar is all I crave.

A dollar is all I crave ♪ ♪ Oh my, oh hey, dollar is all I crave ♪ ♪ Dollar is all I crave, dollar is all I crave ♪ ♪ I gotta get paid but I get paid ♪ ♪ Dollar is all I crave ♪ ♪ A dollar is all I crave ♪ ♪ song fades ♪ ♪ closing music ♪ ♪ <Gabe> Connect with me, Gabe McCauley, and "Reconnecting Roots" by visiting reconnectingroots.com.

Where you'll discover music, blogs, behind the scenes, our podcast, and more.

Join our email list and never miss a beat.

♪ >> Support for "Reconnecting Roots" is provided by the following: RPC.

♪ gentle acoustic guitar ♪ "Plain Values," a magazine on a mission to find joy in the simple things.

♪ Muletown Coffee Roasters is all about slowing things down, digging into community, and encouraging good for goodness sake.

Taylor Stitch is responsibly built for the long haul, and is proud to partner with brands that inspire hope for a more sustainable future.

♪ Sharing a common passion for music and community in beautiful Paradise Valley, Music Ranch Montana's mission to support musicians and provide a place to enjoy it together is reflected in "Reconnecting Roots."

>> At TowHaul, we value the creativity and hard work that built this country and improves our lives by supporting education towards careers in manufacturing and the trades.

TowHaul, proud sponsor of "Reconnecting Roots" and Public Television.

♪ ♪