Gold standard

That's a big lift.

In your own academic work, you've gone back and raised the question about the original decision over a half century ago to go off the gold standard.

Why did that moment matter even today? And what does it tell us about what we should be thinking about for the future?

Well, my view is that we went off the dollar because we were, in fact, spending more than we were taking in and we were starting to borrow.

We have the so-called Great Society Program of Johnson and we have Vietnam War.

And therefore, the countries who were taking these dollars were redeeming them for gold and we thought we were going to run out of gold.

We abandoned the gold standard, which was an external discipline on both the Congress and the administration and the Federal Reserve.

So we gave up that external and we made it more of a political decision now because the Congress is political, understood.

I like it.

You pin 1971 or the uncoupling from the gold standard as a key date.

Why do you think that was the point that things

changed? The brief history lesson is you had the gold standard, the dollar was linked to gold, everything else was linked to the dollar.

And then 1971 was when that came to an end and he got to a point where money has value because we say so, basically.

And that allowed central banks to have far more control over the price of money and the quantity of money.

When freedom has nothing to do with that, you can have enough money to pay your bills if you follow your dreams and earn all the money you can because you're working for something that you believe in, you will be prosperous.

But what we've done, and I thought it was interesting, I went back to look and Nixon's trip to China happened right after we pulled out the last pin in the gold standard.

So Nixon did that end of 71. mostly because the Great Society was about to bankrupt the country.

And the only way to continue funding the Great Society programs that the Nixon administration was not about to get a Democrat-led Congress to pull out of was to unleash the U.S. dollar from its anchor, this big block of gold that's holding it down, and allow the US government to become this debtor nation.

And it's really going to drive investment and make those economies more productive and provide handsome returns at the same time for investors, mainly in Europe.

And part of the infrastructure for this investment was In your book, you talk a lot about the gold standard.

Can you tell us what was so special about the gold standard in this period? Can you tell us how it worked?

The gold standard is a rather mythical monetary system.

A lot of people have heard about it.

I joke about this in my classes when you drive around late at night and you tune into AM radio, at least in America.

It was the British system.

Maybe a few other places used gold, but a lot of other places used silver or both silver and gold, like in France.

And then when you're not here getting through a very long movie, but a very good one, where can everybody find you?

Uh, you can find me with our friends, DJ Nick official friend on our podcast, gold standard, the Oscars podcast.

Um, we discussed the best picture winners.

And now that we're caught up with that and we're waiting for the next one, we are discussing our favorite movies.

finally bringing David Lynch to the podcast.

Yes.

To, to, to gold standard.

I'm looking forward to it.

And he points out, "This is the dollar.

Did you know that the dollar was once backed by silver and there was some gold?" Remember, the gold was there for the treasuries, but the circulation of the currency was silver, which was removed before the gold standard-

S-

... suspension in 1965, where they took out the silver out of coinage.

We're gonna be in a devaluation cycle.

A capital wars are in." We just talked about sanction.

I had a tickle in my ear that some may be, you know, scoffing and may be saying, "Well, that means they're gonna be confiscating gold and silver like they did in... or gold like they did in 1933, the Gold Standard, uh, or the, the Gold Confiscation Act." But the, the fact that they have y- gold and silver on their critical and strategic minerals list, that means the US is focused on building out nationally.

The Trump administra- administration just launched a 3 billion fund towards mining, building it out inter- without having to import it from other countries, even focused on the, the, the education of mining.

Yes.

The anchor of the gold standard.

The old Tartarian system, as we discussed, strictly required physical one-to-one backing for all certificates.

A piece of paper represented a real ounce of gold in a real vault.

But then came the massive paradigm-shifting event, 1971.

The temporary suspension of the convertibility of the dollar into gold.

The end of the gold standard.

The fiat shift.

Even before there were nations as we know them today, it was money.

And so, you know, the act of leaving the gold standard, as people say, and it not becoming official money anymore, and we can talk about that in a little bit, you know, it means now that governments, you know, create their own money, basically.

So it's just a highly political subject.

But I could never understand why, for example, house prices in London cost so much more than what people actually earn.

And then in 1716, he issued the Great Recoinage.

And the guinea became effectively the pound coin, what today would be the pound coin.

And he put Britain on the gold standard, but he was trying to put Britain on a bimetallic standard.

But the problem was all the silver was going.