Most people treat the end of the gold standard as settled history. I'm not sure it is.
In August 1971 Nixon unilaterally ended a 27-year global agreement that had held the entire postwar financial system together. No warning. No consultation with foreign governments. No vote.
What forced his hand was simple math. America had printed far more dollars than it had gold to back. France had already figured this out, De Gaulle launched a secret operation to physically remove French gold from the Federal Reserve vaults in New York. 3,000 tonnes over three years. When Pompidou sent a warship to collect what was left Nixon had no choice.
The consequences we talk about:
- Floating exchange rates
- Dollar becoming the world's reserve currency backed by nothing
- The Petrodollar system that replaced gold with oil
The consequences we don't talk about enough:
- 54 years of deficit spending with no hard constraint
- Every country on earth forced to hold dollars they can't redeem for anything
- The slow inflation tax on every dollar holder globally
The 50-year Petrodollar agreement that expired in June 2024 was the direct successor to what Nixon built that night. Saudi Arabia is now settling oil trades in yuan.
I went deep on the full story here with sources if anyone wants the complete picture: https://youtu.be/sh8muEdbH8c
Are we still feeling the consequences of August 15th 1971, and what happens when the system Nixon built finally unwinds?
Nixon ended the gold standard in 1971 without consulting a single other country. 54 years later it has never been reversed. What are the long term consequences we still haven't fully felt?
byu/CryptoPulse22 ineconomy
Posted by CryptoPulse22
3 Comments
By every measure, it’s been all downhill for the US middle and working classes since Nixon decoupled the $USD from the gold standard and gave the Keynesian fraudsters at the Federal Reserve free rein to print “money” backed by nothing with wild abandon to fund the oligarchy’s welfare-warfare state.
The gold standard hasn’t been the primary global banking practice since the Great Depression. If you want to point fingers for America’s debt and economic issues, we could look at the on and off periods of reaganomics over the last 45 years.
The long term effect will be hyperinflation of every fiat currency not back by real assets. We won’t notice it other than the ever increasing rate of poverty encompassing our societies.
Then revolution, as usual, and a rebirth.
It will be far less painful if we have a well thought out plan for replacement. Maybe we can avoid the revolution part, by making it a transition or evolution in how people think of money generation.
Everyone laughs when I suggest this, and I will keep suggesting this; we need governments to start back-stopping their fiat currency through Bitcoin and Bitcoin mining public infrastructure.
I wi leave it at that, as this is never well received, but I’m willing to explain why I think this should be the next step in money.