A Golden History

August 15, 1971: President Richard Nixon, under pressure from gold speculators, ended the dollar’s convertibility to gold. After 180 years, the United States dollar lifted from its golden perch to float freely as the global economy saw fit.

Since that day just over 40 years ago, the USD has taken the place of gold as the world’s economic “peg,” that medium by which other currencies’ values are judged and maintained. However, in recent years this policy has created a myriad problems. The housing bubble that was a major factor in the recession of 2008 had some of its roots in our nation’s current monetary system. The Federal Reserve’s policy of printing money to keep interest rates low (intended to spur investment, job growth, and economic prosperity) resulted in a flood of new homeowners without the proper credit or income to actually pay for their homes. This created a bubble of mortgage securities that investors the world over put their money into, only to have the bubble burst and the money become lost in these worthless investments.


This will only happen again and again until our money is actually worth something. As it is now, it is only worth as much as the paper is rare (which these days, is not at all). Linking the dollar to gold again would put shackles on the spendthrift hands of our politicians (as there is only so much gold to borrow), and it would prevent the central banks from levying unjust taxes in the form of inflation.

The most wondrous thing of all about a gold standard is that there is no risk of one’s money becoming worthless – the U.S. Dollar would forever have value, as it would be convertible to gold, which could then be stored for safe-keeping. This would help our economy tremendously, as foreign governments would have confidence that our leaders could not default on our debts, and thus we would have impeccable credit. Of course, this would require us to actually innovate as a nation in the form of increasing manufacturing output and amending patent law instead of endlessly trading securities to conjure value from nothing. We would have no choice but to revive the American work ethic and produce the world’s greatest goods and services instead of simply designing them and shipping the work overseas. This will create jobs, inventions, and new industries, all from the over-regulated and under-supported minds of Americans.

If there is one thing that the last several decades have taught us, it is that central banking is not a fool-proof system. It is rife with human error and ideological blunders. We must allow the monetary system to regulate itself in the form of the price specie flow mechanism, reduce transaction costs by fixing exchange rates, and reduce monetary uncertainty in international trade – this is all achievable with a return to the gold standard. The metal was kind to us for nearly two hundred years – why should we dismiss it as a fool’s option now?


About revelationtoo

Gerald Welch is a progressive author living in Madison, WI. After becoming a victim of corporate fraud and runarounds, he decided to write two books, Welcome to Reality and Corporacracy, to share his experiences and ideas. Look for them in stores and online to understand his story and what Corporacracy means to you!
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