Most people are rather poor at realistically evaluating their own skill levels and intelligence, so that, most of those that self evaluate themselves have a strong tendency to see themselves as better than average; and therefore in a construct in which everyone sees themselves as better than average, this essentially signifies nothing of substance. Therefore, this is one of the reasons why students are graded in classes, in order, to acknowledge as well as to separate out the knowledge received and applied by the better students, from those below average and average students.
If, we were to believe, that grades and grades alone signified real knowledge and intelligence, than today's students have never been smarter in the entire history of the United States, and that would be something to hold in exceedingly high regard. For instance, as reported by qz.com, in 2016, "Nearly half of American high school students—47%," are graduating high school with at least a grade of A- or better. This compares to a much less impressive 38.9% that did so in 1998, which is a very meaningful increase of over 20% in A- or better students. However, when we take a look at SAT scores, starting with 2006, when the writing portion was then added to the SAT, the average score in 2006 on the SAT was 1518, whereas in 2016, it was 1484. This means that while never have so many graduated from high school with an A- or better that somehow the standardized SAT scores in the meanwhile have regressed.
The only fair conclusion to the above is that students aren't actually getting smarter, but rather, the inflation of good grades to even better grades has created the illusion that these students are smarter than what is being actualized via standardized tests. Further to the point, as reported by pewresearch.org, in regards to 15-year olds taking the 2015 Program for International Student Assessment which separately measures Science, Mathematics, and Reading, the United States did not finish in the Top Ten in any of those categories, in which, their best finish was 24th place in both Reading and Science, whereas in Mathematics the United States finished below the OECD average.
All of the above, serves to point out the rather obvious which is that the students today, are not smarter than they were in previous years, despite all of their A grades, and in all probability based on SAT scores, are actually a bit dumber. In addition, USA high school students are unable to hold a scholastic candle to numerous countries around the world, indicating that the educational system in America really isn't about educating students, of which standardized tests that measure knowledge indicates such, as, in fact, United States students are barely holding their own; so that it is fair to conclude that the educational system in America is much more about entitlement, deceit, and illusion.
It would seem that grades as structured and given out today, are definitely not a true reflection of the student's ability to demonstrate their knowledge in any real objective sense. This would indicate, that grades and grading perhaps have run their course, and should be phased out into pass/non-pass, in conjunction with nationalized and standardized testing that will more fairly represent the student's "grade" via a numeric number for a particular subject and class, of which, this number will better reflect knowledge learned and thereby applied.