Okay Veeky Forums, I've asked /pol/ and Veeky Forums this question and I've heard their answers. Now it's time to ask you.
>Why did the gold-backed US dollar stop being backed by gold, silver, etc? Isn't it just pieces of worthless green paper now?
Gold
Carson Smith
Thomas Adams
>Why did the gold-backed US dollar stop being backed by gold, silver, etc? Isn't it just pieces of worthless green paper now?
Why was the U.S. dollar ever backed by gold, silver, etc? Isn't it just useless chunks of shiny, dense metal?
Josiah Thomas
Yes, they are. As governments meddled in the economy and imposed low interest loans, a gold backed economy became unsustainable as capital creation via debt skyrocketed. As a result, the government, in an attempt to solve a problem it had created on its own, decide to shift towards fiat currency, that is, money with no value other than being backed by the government. With a fiat currency in place, the government could fight the issues of the debt economy by simply printing more money. This of course, leads to inflation, and does not at all address the debt problem, it only allows the system to keep running.
Josiah White
I think you're missing the point of currency when highlighting Gold Standard over a Fiat Currency system. The amount of money allocated as the cost of a good or service is arbitrary. The only thing that matters is the proportional worth of that good/service relative to other goods/services as an equation of the supply, demand and capital needed to produce the good/service.
Why the Gold Standard was a bad currency format is that most, if not all countries, used it to back their currency. It essentially meant everybody rode the "Gold Train" with its up and downs together; this would amplify gains but also losses on a broader scale. By diversifying in a fiat currency system, you trade the bigger ups-and-downs for a more sustainable system.
I hope this makes sense and, if I've missed my mark or some part is incomplete, someone with more capable knowledge correct me.
Sebastian Wright
Also, adding that an early chapter in Adam Smith's "Wealth of Nations" covers some interesting observations on how using gold/silver to back a currency can affect economies; I recommend that to get a little more background knowledge.
Chase Rodriguez
The US dollar was meant to be linked to gold at a static exchange rate of $35 per ounce. The US government printed more money and thus the ratio wasn't accurate anymore.
The foreign countries that held dollars traded them for gold and thus confidence in the dollar was shaken.
Ryder King
>the debt problem
What problem is that, exactly?
Jordan Cox
>>Why did the gold-backed US dollar stop being backed by gold, silver, etc?
It makes it easier for your government to steal your wealth.
If you use gold/silver as money they have to confiscate it.
If you use FIAT they just print some more or divide the number on your bank account by ten.
Most sheeple wont even notice because they have more important things on their mind: sports, porn, ...
Christopher Bell
If I remember correctly it was because countries started trading their dollars for gold, which pretty much wiped out America's gold supply. So they stopped.
Thomas Gray
Wheat futures had a higher price than gold. Gold became another limited supply commodity, and there were other avenues for wealth creation with a higher return than gold. Linking currency to a limited supply of money, was causing runs on banks and a greater cycle of market crashes.
Henry Ortiz
How in the fuck does one get this stupid?
Bentley Smith
Bump
Lincoln Scott
Read up mate:
>en.wikipedia.org
>en.wikipedia.org
Enjoy!
Ian Mitchell
I didn't enjoy that at all :(
Nathan Watson
this guy has the gist of it, but I'll deviate slightly
gold and silver - may- have been good, even excellent mediums of exchange due to scarcity, relatively constant supply, stability in value, (and other reasons you can google), but they no longer are because of population size (not enough for every circulating coin), fluctuation in value, and worst of all, speculation (which lets the value go haywire).
"money" nowadays is based on industrial output of the nation (products and services). it's "mined" via industrial production, services, and interest rates (I mean where does that interest banks make come from?) and as a result, everything will always be more expensive as money supply increases (all the money piles up - it doesn't "expire", and it's not constant supply like gold) - or until the next crash. so when you say a trillion dollars, it's really a trillion dollar worth of goods, property, services, etc... but it's really an abstract quantity. it's mostly bits on computers now, which makes the system especially fragile, that's why people suggest bartering items (or skills, like services you can provide) in case SHTF, and the metal ones trusted for millenia come to mind.
Joseph Martin
>Why was the U.S. dollar ever backed by gold, silver, etc? Isn't it just useless chunks of shiny, dense metal?
Watch this:
Part one:
youtube.com
Part two:
youtube.com
They explain in exhaustive detail and from many different angles why gold is the only thing that really works as money.
It boils down to the immortality of gold (it does not corrode), it's fungibility, and its scarcity. Basically physics.
Adrian Long
It's not worthless because the government legitimizes its own currency by forcing you to pay taxes with it.
That's literally it. Also because you're forced to use it, you do. Plus 99% of America doesn't even know other currencies exist probably. Plus there is just worldwide demand for the Dollar and Euro in shithole countries. People value it even though it's a "piece of paper."
Xavier Foster
To print money like mad moving all wealth to the richest people in the world, meanwhile they quietly buy up all the gold
James Moore
Holy Christ is everything you just said wrong. Gold is perfect as a backing for currency, except that the moneyed interests live off of credit, and as the country grew the only way to maintain the gold standard was through deflation, which would cripple the above mentioned moneyed interests. Far better for them for the system to have inflation built into it, so they could repay their debts with devalued money.
Nicholas Roberts
The third would values it because they can't buy oil without it. If they try, they get a fat load of freedom and democracy dropped on their heads.
Cameron Thompson
best answer itt. the dollar is strong because petroleum can only be bought with usd, and america uses its strong ass military to extort petroleum from middle east. whenever a country has tried to stop trading petroleum in usd the u.s intervenes.
Justin Green
>Why did the gold-backed US dollar stop being backed by gold?
They printed too many dollars in the '60s to pay for welfare and NASA, without new gold to back it. Other countries, mostly France, called bullshit and asked to cash the dollars back in for the gold. It turned into a bank run, Nixon saw all the gold would be gone soon, so they just pulled the plug on it.
That's what happened.
Carter Smith
>NASA
That's a funny way of spelling Vietnam.
Kayden Thompson
Bump
Luke Ramirez
Bump