From Jekyll Island to Now: The Dollar’s Century of Debasement

How a secret 1910 meeting at Jekyll Island set the stage for the Federal Reserve, how Bretton Woods made the dollar the world’s anchor, why the end of gold convertibility accelerated long-run debasement, and why Rome’s monetary collapse offers cautionary parallels as crypto matures. New policies like the Strategic Reserve, GENIUS Act, and Japan’s XRP adoption hint at the next monetary order — but the U.S. fiat system’s reliance on deficits makes collapse increasingly inevitable.

Abstract.
This essay traces the U.S. dollar’s century-long transformation: the Federal Reserve’s creation at Jekyll Island (1910), the Bretton Woods system (1944), and the Nixon Shock (1971) that severed gold convertibility. It parallels this trajectory with Rome’s currency debasement and explores how today’s policies — including the U.S. Strategic Digital Asset Reserve, the GENIUS Act, and Japan’s adoption of XRP — suggest the next global monetary system may be hybrid, digital, and decentralized. Central to the story: our current fiat system relies on chronic deficits to function, a dynamic that points toward eventual collapse.

1) The Secret Meeting at Jekyll Island: Birth of the Federal Reserve

In November 1910, Senator Nelson Aldrich convened six financiers at the exclusive Jekyll Island Club in Georgia. Under the guise of a “duck hunting” trip, they spent nine days drafting a central banking plan to prevent crises like the Panic of 1907. Attendees included figures tied to J.P. Morgan, the Rockefellers, and Kuhn, Loeb & Co. (Jekyll Island Authority, Wikipedia).

National City Bank president Frank A. Vanderlip later admitted that this “secret expedition to Jekyll Island” was the actual conception of the Federal Reserve System. The blueprint, known as the Aldrich Plan, informed the Federal Reserve Act (1913), which created America’s central bank with powers of note issuance and crisis backstopping.

2) Bretton Woods: Designing a Dollar-Anchored Order

In July 1944, 730 delegates from 44 nations gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire. The aim was to avoid interwar currency chaos and design a cooperative postwar monetary system (Federal Reserve History).

Outcomes included:

• Establishment of the IMF (exchange-rate oversight and lending) and World Bank (development and reconstruction).
• Adoption of a fixed-but-adjustable exchange rate system: currencies pegged to the U.S. dollar, and the dollar pegged to gold at $35/oz.
• With the U.S. holding two-thirds of global gold, the dollar became the de facto reserve currency.

By the 1960s, U.S. deficits mounted as Europe and Japan recovered. Dollars in circulation exceeded U.S. gold reserves. On August 15, 1971, President Richard Nixon ended dollar convertibility to gold — the Nixon Shock — effectively dissolving Bretton Woods (Federal Reserve History).

3) The Fiat Era: Dollar Debasement

Without a gold anchor, the U.S. dollar became a fiat currency, backed only by government decree and public trust. Inflation followed: $1 in 1913 is now equivalent to over $25 today (a ~96–97% decline in purchasing power) (Discipline Funds).

Key features of the fiat era:

• Debt Expansion. Federal debt surpassed $37 trillion (~120% of GDP) by 2025, with annual interest costs exceeding major budget items (Wikipedia).
• Reserve Share Decline. The dollar’s share of global foreign exchange reserves fell from 71% (1999) to ~59% (2023) (IMF COFER via Discipline Funds).

Chronic Deficits as Operating Fuel

Unlike the gold-backed era, today’s fiat system requires large, persistent deficits to sustain growth. Fiscal spending injects demand; deficits are financed by borrowing, which is in turn supported by the Federal Reserve’s willingness to purchase debt and expand liquidity. This cycle is now structural:

• The U.S. has run deficits in 45 of the past 50 years (CBO).
• Interest payments alone exceeded $1 trillion in 2024, larger than defense or Medicare spending (Treasury).
• To service existing debt, the government must continually borrow more, creating a rollover dependency. Economists warn this is unsustainable if borrowing costs exceed GDP growth (IMF Fiscal Monitor).

This dynamic makes the fiat system fragile: it relies on ever-rising debt and deficits to operate. Cutting deficits risks recession; sustaining them risks eventual loss of confidence and inflationary collapse. The “trap” resembles Rome’s reliance on coin debasement.

4) Rome’s Warning: Currency Debasement

The Roman denarius illustrates the dangers of prolonged debasement. Under Nero (64 CE) it contained ~95% silver; by 270 CE, only ~5% — essentially bronze with a silver wash (Nasdaq). The result was 70× price inflation over two centuries, collapse of trust, and failed remedies like Diocletian’s price edict (301 CE).

As historian Patrick Heller observes: “From ancient Rome to modern America, the story of currency devaluation repeats itself.” (Numismatic News).

5) The System on Borrowed Time

The fiat system now resembles an addiction: ever-larger infusions of debt and liquidity are required to avoid collapse. Analysts warn that policymakers “cannot turn off the printers” without triggering crisis (Nasdaq). The reliance on structural deficits means the U.S. effectively borrows from its future to sustain the present — a cycle that history suggests ends in monetary reset.

6) Forward-Looking Adoption: Strategic Reserve, GENIUS Act, and Japan’s XRP Push

U.S. Strategic Digital Asset Reserve

In March 2025, President Trump signed Executive Order 14233, creating a Strategic Bitcoin Reserve and broader Digital Asset Stockpile (White House, Politico).

• The reserve will hold Bitcoin and potentially Ethereum, Solana, Cardano, and XRP, mainly through seized assets.
• A bill in Congress, the BITCOIN Act of 2025, proposes direct acquisition of up to 1 million BTC over five years (NatLawReview).

The GENIUS Act (Stablecoin Regulation)

On July 18, 2025, Congress passed the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins), the first federal framework for stablecoin issuance (CoinDesk).

• Stablecoins must be backed 1:1 by dollars or safe assets, with mandatory audits.
• Oversight falls to federal regulators (Fed, OCC, FDIC).
• This clarity enables stablecoins to scale in payments and settlements — but also ties them to the same fiat system they mirror.

Japan’s Institutional XRP Adoption

Japan is leading in integrating crypto into mainstream banking:

• Reports suggest up to 80% of Japanese banks are preparing to use XRP for cross-border settlements by 2025’s end (Nasdaq).
• The Financial Services Agency (FSA) has approved tokenization projects on the XRP Ledger, including real estate (AInvest).
• SBI Holdings spearheads these initiatives via SBI Ripple Asia, positioning XRP as an institutional settlement asset.

7) Scenarios for the Next Monetary Order

8) Conclusion

From Jekyll Island (1910) to Bretton Woods (1944) to Nixon’s Shock (1971), each step weakened the dollar’s anchor. The long arc resembles Rome’s denarius: debasement, declining trust, and eventual strain.

Today’s fiat system depends on persistent deficits to operate, with borrowing used to finance borrowing — a structural flaw that makes collapse inevitable if confidence falters. Unlike Rome, however, governments are experimenting with new anchors: the U.S. Strategic Reserve, regulated stablecoins, and Japan’s XRP integrations.

Whether Bitcoin, CBDCs, or multi-asset systems dominate, the lesson holds: monetary credibility is precious. Once squandered, it must be rebuilt — often through painful resets or bold innovation.

References

• Jekyll Island Authority. “Birth of the Fed – The Secret Expedition that Formed America’s Central Bank.” jekyllisland.com
• Wikipedia. “History of the Federal Reserve System – Jekyll Island Meeting.” en.wikipedia.org
• Federal Reserve History. “Creation of the Bretton Woods System.” federalreservehistory.org
• Federal Reserve History. “Nixon Ends Convertibility of U.S. Dollars to Gold.” federalreservehistory.org
• Discipline Funds (Cullen Roche). “The Death of the Dollar (in Perspective).” (2024). disciplinefunds.com
• CBO. “The Federal Budget in 2024: An Overview.” (2024). cbo.gov
• U.S. Treasury. “National Deficit and Debt.” (2025). fiscaldata.treasury.gov
• IMF. Fiscal Monitor (2024). imf.org
• Wikipedia. “National Debt of the United States.” (accessed 2025). en.wikipedia.org
• Shah, Tabassum. “Hard to Soft Money: The Hyperinflation of the Roman Empire.” Nasdaq (2021). nasdaq.com
• Heller, Patrick A. “Parallels Between Roman and U.S. Monetary Devaluation.” Numismatic News (2025). numismaticnews.net
• White House. “Establishment Of The Strategic Bitcoin Reserve And Digital Asset Stockpile.” Exec. Order 14233 (2025). whitehouse.gov
• Politico. “Trump signs executive order to create ‘strategic reserve’ of crypto.” (2025). politico.com
• NatLawReview. “Crypto Capitol: States Take the Lead on Strategic Bitcoin Reserves.” (2025). natlawreview.com
• CoinDesk. “The GENIUS Act Won’t Save the Dollar.” (2025). coindesk.com
• AInvest. “XRP Institutional Adoption in Japan.” (2025). ainvest.com