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The US thanks to the Federal Reserve, they were pretty disciplined about it up until 1971.

cj 3y ago
> In 1971, President Nixon terminated the convertibility of the U.S. dollar to gold. Gold-backed currency seems suboptimal for a country unless you have enough trust in the government to honor the "backed by gold" guarantee.
- huytersd 3y ago
  Well there isn’t enough gold in the world. Sure that would just lead to an increase in gold prices but it would be ridiculous, astronomical numbers.
- seventyone 3y ago
  France knew this was coming and converted a sizable amount of dollars to gold. The world lost trust we wouldn't abuse the dollar. We did anyway and then held a gun to their heads by making Saudis push OPEC to only sell oil for dollars. Problem solved for America.
throw0101d 3y ago
> The US thanks to the Federal Reserve, they were pretty disciplined about it up until 1971. They were quite disciplined in the early 1930s as well, which greatly helped the Great Depression to arrive: * http://www.nber.org/chapters/c11482 http://www.nber.org/chapters/c11482 And it's not like the gold standard helps with financial/currency stability either: * https://archive.today/FWKcL https://archive.today/FWKcL / https://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/ https://www.theatlantic.com/business/archive/2012/08/why-the... Further, 1971 isn't some magic year, as inflation was already rising in the mid-1960s: * https://www.federalreservehistory.org/essays/great-inflation https://www.federalreservehistory.org/essays/great-inflation And if you're trying to make a link to inflation, the spikes that the US (and others) saw in the 1970s had little to do with monetary/fiscal discipline, but with commodity prices: * https://en.wikipedia.org/wiki/1970s_energy_crisis https://en.wikipedia.org/wiki/1970s_energy_crisis * https://en.wikipedia.org/wiki/Cost-push_inflation https://en.wikipedia.org/wiki/Cost-push_inflation

cj 3y ago

> In 1971, President Nixon terminated the convertibility of the U.S. dollar to gold. Gold-backed currency seems suboptimal for a country unless you have enough trust in the government to honor the "backed by gold" guarantee.

huytersd 3y ago
Well there isn’t enough gold in the world. Sure that would just lead to an increase in gold prices but it would be ridiculous, astronomical numbers.
seventyone 3y ago
France knew this was coming and converted a sizable amount of dollars to gold. The world lost trust we wouldn't abuse the dollar. We did anyway and then held a gun to their heads by making Saudis push OPEC to only sell oil for dollars. Problem solved for America.

throw0101d 3y ago

> The US thanks to the Federal Reserve, they were pretty disciplined about it up until 1971. They were quite disciplined in the early 1930s as well, which greatly helped the Great Depression to arrive: * http://www.nber.org/chapters/c11482 http://www.nber.org/chapters/c11482 And it's not like the gold standard helps with financial/currency stability either: * https://archive.today/FWKcL https://archive.today/FWKcL / https://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/ https://www.theatlantic.com/business/archive/2012/08/why-the... Further, 1971 isn't some magic year, as inflation was already rising in the mid-1960s: * https://www.federalreservehistory.org/essays/great-inflation https://www.federalreservehistory.org/essays/great-inflation And if you're trying to make a link to inflation, the spikes that the US (and others) saw in the 1970s had little to do with monetary/fiscal discipline, but with commodity prices: * https://en.wikipedia.org/wiki/1970s_energy_crisis https://en.wikipedia.org/wiki/1970s_energy_crisis * https://en.wikipedia.org/wiki/Cost-push_inflation https://en.wikipedia.org/wiki/Cost-push_inflation