The Gold-Standard: Killed by Nixon 40 Years Ago, Today

Posted by - Monday, August 15th, 2011

August 15, 1971: The date in which U.S. President Richard Nixon altered the American economy in a drastic way...

In a public broadcast, televised on TV 3, Nixon ended the Bretton Woods International Monetary System. The United States saw the end of an era -- the end of the gold-standard. In its place, the Nixon administration administered the modern fiat monetary system; what would eventually evolve into an arguably "epic catastrophe."

Poised, yet dramatic, Nixon firmly announced the changes to be instituded immediately. See the video below:

Nixon's decision would forever impact the future of our financial and economic policies. Some call it a "seminal moment" in what would eventually become the moden-day global debt crisis, debilitating the U.S. and Europe on an international level. On that premise

Fast forward 40 years from Nixon's speech to today and gold has fallen in all major currencies except the Swiss france.

Gold is trading at USD 1,742.70, EUR 1,220.10, GBP 1,068.70, CHF 1,375.60 per ounce and 133,820 JPY/oz.  Gold’s London AM fix this morning was USD 1,738.00/oz, EUR 1,214.11/oz, GBP 1,065.88/oz.

Gold in Swiss Francs reached 1,393.24 an ounce this morning – the highest price so far in 2011. Gold in Swiss francs has climbed 7.7% so far in August, 3.7% in 2011 and 8.2% in the past 12 months as gold reasserts itself as the true safe haven.

Now, the question lingers: will the U.S. soon return to a gold-standard? If so, analysts assume the historically re-used, yet refined, standard would be based upon the ideas proposed by Keynes in the late 1940s (read more about them here...)

Ron Paul is one political figure actively aiming to dissolve the modern monetary policies, and has been doing so ever since Nixon implemented the one we're currently in. He is an adament advocate for doing away with the Fed completely...and pretty much any financial or economic establishment supporting the system set in action by Nixon all those years ago.

According to the Wall Street Journal, Paul was shocked that a U.S. president would even consider such drastic actions. In an interview that took place a decade ago, he said:

“I remember the day very clearly,” he says. “Nixon closed the gold window, which meant admitting that we could no longer meet our commitments and that there would be no more backing of the dollar. After that day, all money would be political money rather than money of real value. I was astounded.

Perhaps Paul was so astounded because the idea was historically unprecedented, as currencies were almost always based on precious metals. Fiat currencies create a volatile situation as the value of paper currency is manipulated by the public's faith in politicians and bankers. Break the faith and you'll break the bank.

History proves that most of those currencies only survive for a few decades at maximum, generally resulting in economies plagued by hyperinflation. The U.S. is bound to face the same fate, considering "the U.S. dollar has fallen from 1/35th of an ounce of gold to 1/1750th of an ounce of gold today.

The real risks of hyperinflation increase every day. Even if we somehow avoid it, stagflation and intense seasons of inflation are practically inevitable in just a few short months.

The cause-and-effect relationship has allowed silver and gold markets to surge to record levels. Gold is solidifying its status as the #1 alternative monetary asset in today's market crises. It just might return as America's "Anchor of Stability" after a failed attempt with today's fiat currencies.

*Idented excerpt and stats from zerohedge.com.

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