Thread: what happened in 1971 ???

"Nixon shock".

Read about it here: Nixon Shock - Wikipedia, the free encyclopedia

The reason it matters, is:

Look at all the economic charts. ALL the historical charts, WITHOUT EXCEPTION, show 1971/2 as the beginning of the downturn in the US economy.

So, what happened then?

Well, one thing that happened is, Nixon took us off the Gold Standard. He unilaterally abrogated Bretton Woods.

But there was a REASON for that. Read the link. Here's the summary:

By the early 1970s, as the Vietnam War accelerated inflation, the United States was running not just a balance of payments deficit but also a trade deficit (for the first time in the twentieth century).

The crucial turning point was 1970, which saw U.S. gold coverage of the paper dollar deteriorate from 55% to 22%. This, in the view of neoclassical economists, represented the point where holders of the dollar had lost faith in the U.S. ability to cut its budget and trade deficits.

In 1971, more and more dollars were printed and then sent overseas, to pay for the nation's military expenditures and private investments. In the first six months of 1971, assets for $22 billion fled the United States.

So, to support this thread, I'm going to post a few graphs.

Note carefully: 1971, right?

Why was it so important for Nixon the devalue the dollar by taking us off the gold standard and what prompted him to do so? Could it have been the debt that the war had created coupled with the demand for gold in exchange for dollars by the British who at that time was the largest holders of US debt?

What would happen to the markets and our economy if we were to revert back to the gold standard?

Originally Posted by anonnymous

Why was it so important for Nixon the devalue the dollar by taking us off the gold standard and what prompted him to do so? Could it have been the debt that the war had created coupled with the demand for gold in exchange for dollars by the British who at that time was the largest holders of US debt?

Yes. The British and the French. The French made out like bandits, apparently (they ended up getting paid mostly in gold).

About Nixon, I have a theory and a half - the theory is, that he faced a crisis very similar to the one we face today - no one would loan the US money anymore.

The "half", is, that because he was so busy with Watergate and all that, he didn't really give this the full attention it deserved, and took the "easy" way out, which was to float the dollar.

And THAT, was the beginning of the Ponzi scheme that got us to where we are today.

Originally Posted by anonnymous

What would happen to the markets and our economy if we were to revert back to the gold standard?

Hmm... great question. I think, it might be counter-productive.

Back when "everyone" was on a gold standard, that was exactly the deal - "everyone" was on it. So, monetary policy was easy: just target the exchange rate, and you're done.

But, when we went off the gold standard, there was a "re-distribution" of the gold, not necessarily in alignment with the wealth of nations. So, there are nations with lots of gold but not much cash (Switzerland), and nations with lots of cash but very little gold (China).

So, if we wanted to go "back" to a gold standard, we'd have a problem - because nations would need to be "forced" to trade their gold back at current market prices, meaning they'd probably lose a lot of buying power. ('Cause otherwise, they could use the gold as collateral on a much larger loan).

And correct me if I'm wrong, but I don't think that's something we could do "by ourselves". I mean, in theory, we could - I'm still trying to find out the truth about the rumor that Kennedy actually put us on a silver standard about three weeks before he died.

Here's a blurb from Ron Paul's website, about the Kennedy thing.

JFK vs. The Federal Reserve - Dr. Paul could enact this the first day in office | Campaign for Liberty at the Daily Paul

This cite, says "the order was never rescinded".

Other cites, say Johnson immediately rescinded the order as one of his first acts in office.

Hah!

The Kennedy thing IS real!

Look at this: JohnÂ*F.Â*Kennedy: Executive Order 11110 - Amendment of Executive Order No. 10289 as Amended, Relating to the Performance of Certain Functions Affecting the Department of the Treasury - June 4, 1963

Kennedy did not eliminate the federal reserve, and kennedy silver dollars were not minted until after he was dead. what he DID do, was reissue united states notes. these were the same interest free notes that lincoln and hoover issued. lincoln got killed for it, and hoover had his presidency destroyed for it. US notes allow the government to borrow money short term without accruing interest. if we didn't add interest to our debt each year, we would not have a debt at all. all through the 80's, the annual deficit was less than the interest on the debt. without the interest, we would have had surplusses all those years. but carter borrowed money at 16% interest, and that doubles every 4.5 years, so in 9 years, the 900 billion in debt he left office with doubled twice to 3.6 trillion just from interest, but the actual debt after the first year of bush 1 was only about 2.4 trillion, or a 1.2 trillion surplus without the interest.

And here, is the opposing viewpoint: Part 4: Patriot Arguments on the Income Tax

"We report, you decide".

Originally Posted by nonsqtr

The "half", is, that because he was so busy with Watergate and all that, he didn't really give this the full attention it deserved, and took the "easy" way out, which was to float the dollar.

And correct me if I'm wrong,

Ask yourself this question:

When did the Watergate break in happen?

Ask yourself this question:

Is this thread about 1971?