Why did we drop the gold standard...

[armand61685]

for a fiat currency?

What was their superficial argument?

Thanks

[pappy]

As far as I understand it was because we printed too much money and foreign countries (France e.g.) were trying to cash in their Dollars for gold. Realizing this was untenable, we put a stop to it (I think in the late 60's). Nixon finalized the matter in the early 70's, breaking all ties to of the dollar to gold.

[Pauliana]

In reality - so we could print more money.

I think the selling point however was to stabilize and better control the currency because gold was not elastic enough. IRONY

[WilliamC]

Kinda hard to print more gold when you need it

[adam1mc]

Because the government was losing a ton of money from simple wear and tear. Gold and Silver literally wore away in peoples hands with everyday transactions and the money literally disappeared. That along with the people who would chip very small nicks out of each piece of silver and gold that they received; which devalued the coins for others.

The Government figured they could prevent these side effects by storing gold and silver for the citizens and exchanging them paper money instead. We used to have Federal Silver certificates that were exchanged instead. I've never been clear as to if you could have actually turned those notes in for the actual silver though. (EDIT) Actually reading the bill it says: This Certifies that there has been deposited in the Treasury of the United States One Silver Dollar Payable to the Bearer on demand

[AceNZ]

Why did we drop the gold standard...for a fiat currency?

What was their superficial argument?

The US dropped the last part of the gold standard in 1971 when Nixon backed out of the Bretton Woods agreement.

The way Bretton Woods worked is that it allowed foreign governments to exchange dollars for gold. Nixon tried to raise the official gold price a couple of times, up to around $42/oz, I think, but that didn't stop the flood of redemption requests from abroad that were happening as an indirect result of high government spending that started with Johnson's guns-and-butter programs.

In effect, the US was unable to meet its obligations to foreign governments, and effectively declared bankruptcy by backing out of the BW agreement, thereby putting the final nail in the coffin of the gold standard.

[theseus51]

It constrained government spending too much. If you are the government, on a gold standard, you have to live within your means. To start wars or create new programs, you have to raise taxes, cut spending, or borrow money. If you are unwilling to do those things, you are stuck.

Paper money allows you to devalue the money, and have a hidden tax with inflation. If you had a magic machine to print money, wouldn't you use it? Wouldn't any of us? Well, the government has this machine. The gold standard disables this machine.

[davver]

Bretton Woods was a quasi gold standard where the dollar alone was convertible into gold. This meant that foreigners held our dollars in trust that they were as good as gold. Vietnam and the Great Society required massive government deficients that had to be monetized. When foreigners realized there were more dollars circulating then gold they demanded their gold and the US defaulted. The result was the stagflation of the 1970s.

[ARealConservative]

The truth is our government committed international fraud - and was eventually exposed. We had to abandon the gold standard in 1971 because we cheated for years (New Deal, Great Society, etc, etc) and would of went bankrupt fulfilling the obligations we made with all the fiat currency in circulation.

The amazing part is that after doing this to the international community, we still maintained our standing as THE reserve currency. So when pondering how asleep our fellow American's are, consider those living abroad too! They have been subsidizing our overspending for decades and still do.

[polomertz]

The amazing part is that after doing this to the international community, we still maintained our standing as THE reserve currency. So when pondering how asleep our fellow American's are, consider those living abroad too! They have been subsidizing our overspending for decades and still do.

We made another deal with the devil and switched to oil. A dollar/oil monopoly protected mostly by the United States Military. I'm sure a lot of us could go on and on about that part. Everybody should Google Petrodollar and watch Ron Paul's Speech on The End of Dollar Hegemony.

[DealzOnWheelz]

HHHHMMMMMMM Because the politicians figured out NOBDOY COMES TO COLLECT THEIR GOLD SO THEY COULD PRINT UP MORE THAN THEY HAD THUS THE DEATH OF THE GOLD STANDARD