Of course even when Nixon completely detached the dollar from gold we had a very very modified gold standard. But at least there was some tie to reality.
Now we live in an almost completely fiat system, though it can be argued – well – that oil is the de facto backer of US currency these days, the so called petrodollar. (Though some do not buy this argument.) Regardless we live in a highly financialized world with lots and lots of cheap money floating around.
One of the most important moments in American economic history. Nixon killed the last vestige of sound money in America. Within a decade the USA was heavily financialized.
By Clint Siegner, Money Metals Exchange
Sound money issues make for good politics these days. The leading Republican candidates have all suggested reforms to our monetary system. The topic is popping up in debates as well as interviews. Predictably, Fed worshippers and proponents of central planning everywhere are snickering and trotting out the usual responses.
Michael Hiltzik, with the Los Angeles Times,
The dotted line indicates where the dollar was detached from gold.
One the most important things about gold as a monetary foundation is that it forces financiers and economists to deal with reality. Gold is the North Star by which economies and currencies are judged. It’s been this way for millennia, and it likely will remain the case for many years to come. But we have detached our money from gold, and reality. In 1971 Richard Nixon severed the last ties the dollar had to gold.
The red dotted line is where we finally said goodbye completely to the gold standard.
Piketty has largely been “taken down” already. That the economist does not acknowledge that the current fiat money system and the financialization of the world economy generally is what is driving inequality, not “capitalism,” is a huge problem. To say the least.
But others have come after Picketty from other angles.
Failed it did. But perhaps it was for the best.
The big banks and governments don’t want the Swiss people to reback their money 20% with gold. What does that tell you?
Gold is real money. Paper is not. Gold doesn’t rise and fall in price (generally). Paper becomes more or less valuable relative to gold. This concept is lost on the general public. It is not lost on the bankers and the folks in government.
The establishment fears gold money. It reins in their power.
It is an idea that is popular in at least 4 states.
It won’t happen tomorrow but slowly but surely the world is moving from dollars. The petrodollar system which has been key to the world economy over the last 40 years is eroding. More and more country to country deals are being done in currencies other than the dollar. The economic world as we have known it, after Bretton Woods in the Cold War Era, the post Cold War era, and the post 9-11 era is fundamentally shifting. The dollar is not what it once was.
What can I say? The guy is right. He’s right almost all of the time, and on this point he is especially right.
It’s not just Greenspan, suddenly it’s respectable to come out against the Federal Reserve. The attached article is a case in point.
The consumer is feeling renewed stress. Gas prices are up. Food prices are up. But incomes are stagnant or down generally.
Gold, God’s money. The only thing every person in the world wants, and every government.