This chart shows the value of the US dollar in milligrams of gold. In 1971 President Richard Nixon took the United States off the gold standard in essence to devalue the dollar and thereby reduce the fiscal burden of the Vietnam War debt. The chart clearly shows that the dollar never recovered its previous purchasing power as measured in gold, the only other international currency. This drop in value reflects the continuous use of deficit financing by the federal government--regardless of the political party in power--since World War II. By 1946 the Federal Reserve had increased M2 by $138.7 billion. By 2009 M2 has been increased to $8.236 trillion or 5,938%. Another way to understand the effects of fiat money is to assume the year 1800 as the dollar's baseline of $1. The dollar in 2009 is now worth 8 cents. Some clever analysts believe that the falling value of the dollar has given rise to a vigorous "dollar carry trade" similar to the previously lucrative "yen carry trade"--basically a currency arbitrage-- that will keep a downward pressure on the dollar for an extended period of time.source: www.zerohedge.com/sites/default/files/images/SeanMaloneRiseFallDollarLarge.jpg