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Abandoning the gold standard was a fatal error we’re now all paying for
Posted By admin On August 14, 2011 @ 4:32 am In Money Watch | Comments Disabled
London Telegraph 
Aug 14, 2011
That’s right: come Monday morning we will have managed to survive four decades of fiat money – though, given the chaos in markets in recent weeks, it is anyone’s guess how much longer it will last.
On 15 August 1971, with the US public finances straitened by the cost of the war in Vietnam, Richard Nixon finally cut the link between the US dollar and gold. Until then, the US Treasury was duty bound to exchange an ounce of gold with central banks willing to pay them $35.
Suddenly, for the first time in history, the level of the world’s currencies depended not on the value of gold or some other tangible commodity but on the amount of trust investors had in that currency. Central banks were allowed to set monetary policy based on their instincts rather than on the need to keep their currency in line with gold.
It was one of those seminal moments whose significance has only gradually become apparent, obscured as it was at the time by Vietnam and then Watergate. But the more one examines economic history, the more obvious it is that this was one of the most important policy decisions in modern history.
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URLs in this post:
 London Telegraph: http://www.telegraph.co.uk/finance/comment/edmundconway/8699815/Abandoning-the-gold-standard-was-a-fatal-error-were-now-all-paying-for.html
 Image: http://www.prisonplanet.tv/
 Watch congressional hearing by Ron Paul on a return to the gold standard: http://www.prisonplanet.com/watch-congressional-hearing-by-ron-paul-on-a-return-to-the-gold-standard.html
 Return to Gold Standard? Why Price Would Hit $10,000: http://www.prisonplanet.com/return-to-gold-standard-why-price-would-hit-10000.html
 Today Is The 40th Anniversary Of Nixon Ending Gold Standard And Creating Modern Fiat Monetary System: http://www.prisonplanet.com/today-is-the-40th-anniversary-of-nixon-ending-gold-standard-and-creating-modern-fiat-monetary-system.html
 Dialogue #1 On the American Gold Standard: http://www.prisonplanet.com/dialogue-1-on-the-american-gold-standard.html
 Fiat Currencies May be Replaced by Gold Standard: http://www.prisonplanet.com/fiat-currencies-may-be-replaced-by-gold-standard.html
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