Chapter 67 6. The general attack on the abolition of gold currency

Nixon didn't understand or didn't want to understand why gold fled like a river breaking its bank, no matter how the US government tried to stop it, it would be of no avail.The essence of the problem was that the U.S. balance of payments account had exploded in deficit, and the U.S. was effectively unable to maintain a fixed exchange rate against gold.It is not that there is too little gold, but that the US banking system has created too many dollars. Fed's John.Exeter tells the final story of the golden showdown: On August 10, 1971, a group of bankers, economists, and currency experts held an informal discussion on the New Jersey shore to discuss the currency crisis.About three o'clock in the afternoon, Paul.Volker's car arrives.He was undersecretary of the Treasury at the time, responsible for currency issues.

Together we discuss various possible solutions.You know, I've always supported a conservative monetary policy, so my proposal to raise interest rates significantly was rejected by the majority.Others don't think the Fed will slow credit expansion, fearing a recession or worse.I also suggest raising the price of gold, Paul.Volcker thinks it makes sense, but he finds it difficult for Congress to pass it.World leaders like the United States are unwilling to admit to their people the reality of devalued currencies, no matter how serious the problem.This is really embarrassing for them. Up to now, most of the people are not aware of the (currency) crisis we have encountered.It wasn't like 1933 when the country was in a state of emergency and Roosevelt could do whatever he wanted.

At this time, Paul.Volker turned to me and asked what I should do if I were to make the decisions.I told him that because he didn't want to raise interest rates and gold prices, he had to close the gold exchange window and continue to sell gold from the treasury at thirty-five dollars an ounce.Five days later, Nixon closed the golden window. On August 15, 1971, the final truth finally came.The United States has been unable to fulfill its international commitment to peg the dollar to gold. This is the second time that the United States has reneged on the international community since Roosevelt reneged on the American people in 1933.In his speech that night, Nixon slammed speculators in the international financial market for creating chaos in the financial market. In order to protect the US dollar, it is necessary to temporarily abandon the US dollar for gold.The question is, who are the opportunists Nixon is referring to?You must know that when Soros and others were still young, due to the constraints of the Bretton system in the foreign exchange market, the exchange rate changes were almost negligible.Not every investor can go to the United States to exchange gold. Only the central banks of various countries have this qualification.And it was the French government who took the lead in making trouble back then.

When the last link between gold and the U.S. dollar was cut off by President Nixon on August 15, 1971, the moment that made international bankers nervous and excited finally came. This is the first time in human history and the world. It is too early to say whether this is a blessing or a curse for human society and civilization. After the Western industrial countries headed by the Federal Reserve broke free from the curse of gold, they really started an era of unprecedented credit expansion. Currency issuance has reached the level of unrestrained and arbitrary. As of 2006, the US government, companies and private individuals The total amount of debt owed has reached as high as 44 trillion U.S. dollars. If the minimum interest rate of 5% is used, the annual repayment of interest alone will be as high as 2.2 trillion U.S. dollars.

The problem is that this debt has reached the point where it cannot be repaid, and the debt must be paid, either by the person who owes it, or by the person who borrowed it, and worse, in the end it will be paid by the hardworking taxpayers of the world repay.