I’d argue that the world was already flooded with “funny money” by Nixon’s unilateral repudiation of the Bretton Woods agreement in 1971 (more on that, below) but even still, when the Financial Times is pimping a return to gold-backed money, what’s next, flying pigs?
When Richard Nixon destroyed the Bretton Woods International Monetary System in 1971 by closing the “gold window” at the Treasury, he severed the last link between dollars and gold. What followed was a spiralling proliferation of increasingly spurious credit instruments denominated in a debased currency.
I’m not sure the tie is completely “severed”, for instance, as long as the Government continues to run that printing press, the price of gold (in terms of dollars) should continue to rise.
It’s also important to remember that the monetary system installed under Bretton Woods agreement was already a severely debased version of a “gold standard”.
Most central banks had suspended convertibility during the first world war. The German hyperinflation of the interwar period was at least in part fueled by the crushing reparations due, and the onset of the second world war was more-or-less accurately forecast by J.M. Keynes in The Economic Consequences of the Peace.
The United States had begun to sever the de jure tie with gold as early as (if not earlier than) in 1913, but the most pernicious event occurred on April 5, 1933 when Franklin Delano Roosevelt ordered the expropriation of all privately owned gold money.
What followed was an explicit debasement of the dollar by at least 69%, raising the official price of gold from $20 to $35 per ounce. After Bretton Woods, Special Drawing Rights were required to convert currency into gold, and these SDRs generally reserved for international traders and government entities. As the dollar became the de facto reserve currency of the world, the United States found itself in the fortunate position of being able to export most of its inflation to the rest of the world.
Even Alan Greenspan once argued that “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation.” So, if you want to talk inflation, (in terms of rising prices which reflect an artificially augmented money supply) just look at the chart to the left, showing the estimated Consumer Price Index from 1800 to 2007. The advent of the Federal Reserve in 1913 is barely a blip on the radar when compared to 1971, but the former paved the way for the latter.
It’s not about some bizarre fetish for a “barbarous relic”, really, it’s not. It’s about plain-and-simple theft. It’s about rights. It’s about the wholesale expropriation of private property, by one of the greatest Moral Defectives ever to preside over the country.
People ought to respond to things like this, even to say stupid shit like “boner!” or “pwnt!” Like, David, WTF!?!!??! People have burned banknotes in the past this way because that was the economic thing to do. Why is it that, having already seen this photo, tens of thousands or more do not run immediately to their neighbors ready to enlist in the revolution?
[...] beholden to a banking cartel, to extricate themselves from its stranglehold by using its funny money. The real fact is, if private citizens were allowed to freely lend to one another, the private [...]