Nixon 1971 defaults GOLD BARS - worth $60 billion dollars.

In 1970, without consent or knowledge of its honest people, US Government cataclysmically defaulted on a staggering amount of gold bars, cheating ALL countries of the entire planet ! Equivalent to 60 billion in U.S. dollars at that time! It simply refused to enforce a 25 years old contract clause, signed after WW2, where, in exchange for an exorbitant privilege of becoming the only world currency ever, US Government got committed to redeem dollars for gold.

It means to deliver physical gold in an amount equivalent to US-bills at 35 dollars/ounce rate, when eventually demanded for redemption at Treasury, though permitted it to foreign governments only.

Such agreement in 1945 settled during Bretton Woods Agreement on International Monetary System Conference, provided an unprecedented "international currency" for international trade. It was backed by gold, but made through the use of U.S. dollars notes - a solid currency then. Good deal for all.

That was the 1945 "Dollar-Gold" monetary system.

Thus made, and under US Treasury guarantee of redemption in gold, countries started to accept solid dollars from each other as payment for their goods, all sold around the world: food, natural resources, oil, sugar, coffee, minerals, aircrafts, cars, everything!

And international trade got a remarkable boost.

A fantastic deal for US as international commodities started to be priced in dollars, creating a huge international demand for dollars, which US were happy to print ink on paper and sell it in return for goods !!!

What a free lunch, wow !!! Goods for ink on paper !!!

That would remain perfect for all parties involved, but for one flaw: though US Government had promised not to print much money, it allowed no foreign supervision on US' printing presses ...

Nobody likes to accept debased money, because devaluation in purchasing power means literally confiscation of x% of it. Just like adding water to raw milk, and selling it. It's fraud, governments do it, but governments cannot be taken to prison.

As Vietnam War (in 60s) required huge amounts of money that US Government did NOT have, how then would US buy goods abroad?

Then they started printing staggering amounts of bills, and therefore debasing it and devaluing it, and went abroad paying purchased goods with it.

And then next, foreign countries detected decrease of purchasing power of their dollar bills, and next increasingly started to demand redemption in gold to prevent their savings from indirect confiscation! It went through until Nixon defaulted such obligations, and labeled it "Golden Window" to be closed.

The U.S. dollar-gold bill (redeemable in gold, since 1945) overnight became U.S. dollar-paper bill, turned into bad checks!

Search Google for "Nixon Golden Window" and see cynicism in understatement! Then default in 1970 singlehandedly was turned into a poetic fairy tale like ... " closure of Golden Window, through which international speculators were perversely bleeding U.S., taking away American gold! Wicked ones were British and French governments, subtracting U.S. gold! ".

It looks like Obama administration saying that attack on Libya is not a war, but only a "military kinetic action "!

US Treasury Secretary then said to entire world: - "It's our money , but it's your problem !".

This "Gold Window" cheek was adopted by ALL governments of the world, so as not to confess to their people that their national Treasuries had suffered default from THE superpower, and there was nothing they could do about it ! ah, ah, ah!

Read surreal book "1984" by George Orwell, written in 1949, describing future (today!) rise of totalitarian regime that would dominate mass communication and distort society's subdued sense of perception, where "War is peace ", " Dissent is treason ", etc..

*************

IN TIME :

Much worse than Nixon's default itself, this blow simply DESTROYED the then Monetary System, a needed lasting reference for currencies, and it has NOT been replaced by anything - contrary to Nixon's promise on TV.

The result has been this current vague "Floating Currency" over the counter "free rate", which is absolutely NOT a system !!!

Countries lost control of their monetary policies, because politicians all over the world became aware to the fact that ...

THEY THEN WERE SO FREE TO PRINT AT WILL !!!

So now, whenever they say we have a Monetary System of Free Floating Rates, then you can respond:

THEY DO NOT FLOAT BEFORE EACH OTHER, BUT RATHER THEY SINK AT DIFFERENT RATES, AS GOVERNMENT PRINT PAPER-BILLS !!!

A RACE TO HELL !!!

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[canman1878]

Could someone explain this to me in laymans terms?

Is Nixon saying that if the US has a large gold reserve that the value of the currency is dependent on the market value of gold determined by the speculators?

[BrazilianTribe]

@canman1878 what he is saying is a twisted manner to explain that the the US is stopping delivering gold bars regarding its contracted obligations in exchange for the printed dollars, while simultaneously blaming the speculators for such necessity. He accuses speculators of attacking the dollar. In short words, he does not want to pay his obligations anymore, and it's because he is running out of gold.

[Civsuccess2]

Nixon is a smart man. Without devaluation, foreign nations would sell stuffs to US in exchange for US dollars and its gold. Pretty soon, US will run out of gold and lose all the wealth.

[BrazilianTribe]

@Civsuccess2 ok, but ... that is not being smart, that's being a scammer.

The US in 1945 had contracted obligations IN EXCHANGE for a concession from all countries: it's that they all would accept US currency in their int'l trade, PROVIDED that such currency was gold-convertible. Then, from 1945 on, the US started printing paper-money as if there was no tomorrow, devaluing the paper-currency that the countries had in their pockets, which is ultimately a form of CONFISCATION.

[linagee]

I'm not sure whether to like or dislike this. Like for providing the video. Dislike because Nixon is a crook.

[linagee]

Suspend temporarily???

[Civsuccess2]

@BrazilianTribe That's because foreign nations does not exchange for US dollars. They exchange for gold. Foreign nations violated this contract by taking the gold out of US. It is true that US does not refund all nations who deposited in US with gold. Yes, it's somewhat a confiscation. It's all for the good of US pp.

[Kaecyus]

@canman1878 But normally baseless currencies would fail, right? That is where the US had it's strength; the US was just too big to fail, like the banks. The largest currency in the world couldn't default because of how much Import/Export business was conducted with the US Dollar.

[Kaecyus]

@canman1878 Because in the 60s the US did a form of Quantitative Easing (ie printing more money) to represent the same amount of gold in the US Treasury, the currency became worth less. Sort of like chopping an onion into slices (before), then dicing it and having each diced chunk worth as much as a slice (after).

Then the US tried to hide this and call it 'speculation' (similar way to fuel prices now), and thus removed gold conversion to make US$ a baseless currency.