RICHMOND, VA (WWBT) - The declining dollar is something that worries the members of Virginia's Tea Party and they think they know who is to blame.
After last week's announcement that the Federal Reserve plans to buy up $600 million in U.S. Treasury bonds, the Tea Party fought back.
They believe the Fed has purposely driven down the value of the dollar. In a letter, to officials in the federal government, last week the Tea Party charged:
"[Since the Federal Reserve's inception] the U.S. dollar has lost 98% of its purchasing power. We believe that this alone is compelling reason enough to tear down the veil and audit the Fed. Chairman Bernanke's recent actions make the need for this audit all the more urgent."
That got the reporters at Politifact Virginia wondering: Has the dollar really lost 98 percent of it's value and if so, is the Federal Reserve to blame?
The Tea Party cites a cause and effect relationship between the Fed and the dollar's value. The Federal Reserve was created in 1913 and in that time the currency's power has diminished.
According to the Richmond Times-Dispatch that claim is "half true" and here is why.
Yes, the dollar has lost a great deal of it's value, although not quite 98 percent -- a figure the Tea Party came to using the gold standard.
According to the Consumer Price Index, the dollar's value has dropped 95 percent a figure that is in the ballpark.
But the Tea Party's logic runs into trouble because they ignore that the average income of Americans has increased dramatically since 1913, so while the dollar is worth less, we still have more of them to spend.
Despite the flaws in their argument, Times-Dispatch reporter Wesley P. Hester said the Tea Party Patriots do have a point.
"Their percentage was off a bit but not by a whole lot," he said. "They did leave a few things out but generally what they said is still true that the power of the dollar to buy goods has gone down."
And this is obviously a pretty involved topic. You can see the complete report on www.PolitifactVirginia.com and in the Richmond Times-Dispatch.