Since President Nixon ended the last vestige of the gold standard in 1971, the result has been the same as every other time governments have replaced honest money with fiat fraud—a complete disaster. From William L. Anderson at mises.org:
On August 15, 1971, the last remains of what had been a magnificent monetary system died a terrible death, and the American academic, political, business, and media elites led the cheers. The Dow Jones Average jumped by more than 32 points the next day. A de facto national default was spun as a great liberation from a tyrannical financial arrangement that had plagued humanity for generations. A half century later the disinformation continues, as intellectual bankruptcy parallels the financial bankruptcy of that event.
I write, of course, of the decision by President Richard Nixon to officially close the “gold window,” through which the US government was obligated to sell its gold stores to foreign governments at $35 an ounce, which even then was a bargain. As Nixon’s regime encouraged the Federal Reserve System to inflate the dollar to pay for its bloated military and welfare spending, as had the Johnson and Kennedy regimes before him, it became apparent that the US dollar was quickly losing value. The United States was in rapid decline—and the dollar was falling with the nation’s prestige.
What happened? There are several accounts, and I will give the main ones, ending with the Austrian perspective. The first will be the Keynesian, the second the monetarist (Chicago school), the third the supply-side version, and the fourth from the Austrians. Before doing that, however, I will give a brief account of the events that began with the Bretton Woods Conference in 1944 and ended in national disgrace, an ignominy that even now the official American narrative refuses to recognize.
Posted in Banking, Business, Civil Liberties, Collapse, Debt, Economy, Governments, History, Morality, Politics
Tagged Fiat dollar, Floating exchange rates, Gold Window closure
Produce enough of anything and you can drive i to worthlessness. That’s particularly easy with fiat currencies, and governments have done it throughout history. From Egon von Greyerz at goldswitzerland.com:
Was Richard Nixon a real gold friend who understood the futility of tying a weakening dollar to gold which is the only currency that has survived in history?
So was Nixon actually the instigator of the movement to FreeGold?
I doubt it. He was just another desperate leader who was running out of real money and needed to create unlimited amounts of fiat money. Although his fatal decision to close the gold window was clearly the beginning of the end of the current monetary system.
But although the decision was fatal, Nixon was clearly not personally responsible. What the world saw in August 1971 was just another desperate leader who realised that he couldn’t stick to the monetary or fiscal disciplines necessary to maintain a sound economy and a sound currency.
In history, Nixon should be seen as the rule rather than the exception. Since every currency has been slaughtered throughout history, one particular leader will also be required to be the executor.
So in 1971, history had elected Tricky Dick to be the inevitable destroyer of the dollar.
I don’t quite know what the definition is of “suspend temporarily” but 50 years seems to be pushing the limit!
And as regards the strength of dollar goes, we all know what happened to the “strength of the currency”! Please see the illustration of the dollar collapse further on in the article.
Posted in Banking, Business, Collapse, Currencies, Debt, Government, History, Investing
Tagged Closing the gold window, Fiat dollar, Gold, President Nixon