From Gold To Nothing: How 1971 Changed Everything In The Economy

https://www.zerohedge.com/news/2019-...ything-economy

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Via Duino Schiappapietra,

The monetary system is a major component of the whole economic system. Despite that, today we take it for granted and don’t even ask ourselves how it works and if it is the best solution available or the correct way to manage things.

Even though it appears to be stable, history shows that monetary systems changed periodically in the last century (20–30 years on average).

The main difference between our current monetary system and previous monetary system is that today it is entirely based on FIAT Currency, in contrast to older monetary systems that were backed by gold.

That means that what we call money is a government-issued currency that has zero intrinsic value and is not backed by anything.

From 1971, this kind of system allows central banks to literally control the economy and opened a new chapter in the world monetary system.

In this article, I am going to briefly explain why 1971 changed everything and what are potential consequences of such a decision.

Since 1971 the world runs on FIAT currencies that are not gold-backed in any way. This changes everything.

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Full article at link.

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Zippy should be along shortly to say there is no problem with not having gold. Ever seen a country start with anything BUT gold and collapse with anything BUT a Fiat Currency?

Fiat gives the powerful nearly unlimited power to steal and cashless would make that power truly unlimited.

Before 1971 no country ever failed. There were no recessions, bubbles, inflation, or unemployment. It was an amazing time to be alive!

Got to teach folks that gold IS money. And reclaim what was stolen in 1933.

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Originally Posted by merkelstan

Got to teach folks that gold IS money. And reclaim what was stolen in 1933.

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Do you use gold when you buy things- you know, use it as money?

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Originally Posted by Zippyjuan

Before 1971 no country ever failed. There were no recessions, bubbles, inflation, or unemployment. It was an amazing time to be alive!

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It was far better and the bad things that happened along with the slow constant theft and dis-empowerment were not so bad.

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Originally Posted by Swordsmyth

It was far better and the bad things that happened along with the slow constant theft and dis-empowerment were not so bad.

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Yes, that Great Depression was truely amazing, wasn't it? Why can't we have things like that today?

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Originally Posted by Zippyjuan

Yes, that Great Depression was truely amazing, wasn't it? Why can't we have things like that today?

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We do and worse, it would have been much worse had FDR been completely free of the gold standard.

did gold prices change wildly on the gold standard?

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Originally Posted by kfarnan

did gold prices change wildly on the gold standard?

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Government defined how many dollars it took to buy an ounce of gold. There was no free market price so it did not change unless the government changed it.

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Originally Posted by Zippyjuan

Do you use gold when you buy things- you know, use it as money?

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I've used silver certificates which you could cash in for real PM, to buy things & silver coins too. Years ago.

Ya, there used to be real money.

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Originally Posted by Zippyjuan

Government defined how many dollars it took to buy an ounce of gold. There was no free market price so it did not change unless the government changed it.

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Wrong.

Gold was money, a dollar was a certain amount of gold, the papers people traded around were just receipts for a certain amount of gold.

The classic gold standard was usurped by the bretton woods gold standard.

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Originally Posted by kfarnan

did gold prices change wildly on the gold standard?

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Price of gold should be used as the metric for every other metric. You see, its not the price of gold that goes up and down. Gold does NOT change its value. You cant print it. You cant make more of it. You cant destroy the gold that exists already. Despite what Zippy says, the price of gold, because of its natural scarcity, it will always maintain real value. Currency was tied to gold once upon a time, and when it was, that currency was exceptionally stable. Once our currency had been disconnected from being backed by gold, which limited how many paper dollars the US Govt could "print" / "borrow" into existence, the value of the dollar went all over the place.

So to answer your question, gold didnt change, it never did. What changed was the purchasing power of the Paper Currency. The less value that Paper Currency has, the higher the Gold price. Same with Inflation. It isnt that the cost of things continue to go up up up, its that the purchasing power of the currency has gone down down down. The US Dollar has lost 97% of its value since we disconnected from a Gold Standard.

So, question. How much actual gold, real physical gold got printed during all that time?

Gold's value does change over time. And not just relative to the dollar. Relative to other things as well. Take silver for instance. Silver is also supposed to hold its value. IF both silver and gold are holding their value, their relative values should not change. Or if so, not by much. Value is relative and subjective- things have value because people think they have value.


https://static.seekingalpha.com/uplo...er-ratio-1.png

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Originally Posted by Zippyjuan

Gold's value does change over time. And not just relative to the dollar. Relative to other things as well. Take silver for instance. Silver is also supposed to hold its value. IF both silver and gold are holding their value, their relative values should not change. Or if so, not by much.


https://static.seekingalpha.com/uplo...er-ratio-1.png

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That's true of everything but if you pick a single rare item like gold its relative value will remain much more stable and/or rise and it will be much harder for someone to use it to rob everyone else.