3 ms·

>Insisting on a fixed money supply is insane and destructive. The gold supply isn't fixed. Total supply has inflated at roughly 1.5-2% every year for the last

• slowmovintarget 4y ago
  The real reason we stopped basing the U.S. dollar on gold was that institutions and foreign governments were buying dollars and demanding gold in exchange. The U.S. was losing it's supply. Nixon put a stop to it in order to stop the bleeding. https://www.federalreservehistory.org/essays/gold-convertibility-ends https://www.federalreservehistory.org/essays/gold-convertibi...
  • simonblack 4y ago
    Those countries weren't buying dollars, they were gaining them in trade. Maybe a better way of looking at it was that various countries were accepting dollars from the US for goods of various kinds. In other words they were accepting colored pieces of paper in exchange for real things like cheeses or cars, or aircraft. So when they wanted to reduce the number of dollars they were holding on hand, they went to exchange those excess dollars for gold. Nixon refused. He had to, otherwise the US would have been forced to default on its debts. From then onwards, the US Dollar has lost roughly 98% of its value in those 50 years. Gold used to be worth $35 an ounce till Nixon's default. An ounce of gold is now just on $2000. $35 as a percentage of $2000 is 1.75%, so the USD has lost 98.25% of its value. A Rolex Oyster watch in 1970 was $210 dollars, its cost is now somewhere around $10,000.