Trust a winner who believes in a higher power. The world was very different in 1944 than it is now. The United States of America was “The Arsenal of Democracy”. “God fearing” Americans were leading free world in triumph over evils of Fascism demonstrating a noble, yet friendly sense of humility and service. It probably seemed easy to trust a country made up of such down to earth “citizen soldiers” as David Ambrose once called us. On front of every Silver Certificate and sliver coin in circulation at time were words “In God We Trust”. Being “the land of free” it certainly didn’t seem to matter which god in particular you trusted while spending those dollars. It was more of a reminder, even to those of us that had not been in combat, that there was more to our multifaceted and colourful lives than that which passed in front of our noses.

Up to then Americans had been used to a strong vision usually backed by strong, believable leadership. Slogans like “Manifest destiny” had been replaced by “making world safe for Democracy” yet we still acted liked we believed them deep in our souls. We had always been a spiritual country with “God on our side” and now we had proof; we won The War!

With this as a backdrop, famous “Bretton Woods agreement” was signed in 1944 effectively substituting U.S. Dollar for gold as de facto reserve currency of world. The United States didn’t need much marketing and spin to sell Dollar at Bretton Woods as everyone clamoured to be on our team. By way, can you remember or more importantly, do you care who chairman of Federal Reserve Bank was during this glorious time?

With all these factors supporting it, world was now invited to buy U.S. Dollars. Since they were trusted to be “as good as gold”, rest of world began buying them, with vigor.

The Digital Age. Not long after Bretton Woods agreement; first Sperry Univac computer was invented. With invention of Univac Computer, digital age was born. It wasn’t too long before someone figured out that you could “make” money with computers. It wasn’t too long after that that financial community realized that you could “create” electronic money with computers too!

What Inflation and Deterioration have in common: There seems to be, or at least feel like there is a strong correlation between explosive creation of electronic money and deterioration of our unified trust in our leaders’ vision and spirit. Indeed, inflation seems to affect more than our money! Many old-timers will tell you that during depths of depression in 1930’s it was very rare that anyone locked their doors, as thought of getting robbed was probably as foreign to them as an average house costing $250,000.00!

Everyone was “in it” together. There was a “golden” sense of family and community that United States of America radiated out to rest of world and everyone else desperately wanted to be part of that club. From Bretton Woods onward, price of membership was now in Dollars.

Pretty soon digital currencies were born and of course, daddy of them all was “Almighty Dollar”. If you are reading this article you have no doubt an understanding of what monetary inflation curve has looked like since “Bretton” Woods and its parabolic rise since subsequent invention of PC and Internet. But have we lost something less measurable yet, possibly more valuable on way?

By Barrett Niehus http://www.freetrainer.com

Unlike other investors, my venture into real estate was a natural extension of my secondary business as IP Ware software developer. However, opportunity and perseverance beget wealth, or at least a decent side income.

Aside from my ventures into lease optioning residential property, I and my partner have managed to acquire a number of properties with our own credit. However, when looking at our finances and return we were getting for amount of effort involved, we both decided there must be a better way. That is when it occurred to me. Instead of trying to leverage our existing assets for a diminishing return, perhaps we could be bank.

Here is scenario as it has played out. First of all, we control a decent number of properties with our own credit. Most were purchased with 100% financing using multiple capital sources. However, each contains only a primary lean and is financed using standard mortgage terms. Subsequently, there is a 20% secondary credit position available on each of these properties.