Overview
The gold standard was a monetary system where paper currency could be exchanged for a fixed amount of gold. This system limited governments' ability to print money and protected citizens' savings from inflation. The destruction of the gold standard happened in three stages: the 1933 gold confiscation, the 1944 Bretton Woods system, and the 1971 Nixon Shock.
Critics argue that ending the gold standard was a deliberate plan by banking interests to enable unlimited money creation, perpetual government debt, and the systematic transfer of wealth from ordinary people to the financial elite through inflation.
Since 1971, when Nixon completely severed the dollar's link to gold, the U.S. dollar has lost over 85% of its purchasing power. Meanwhile, national debt has exploded from $400 billion to over $34 trillion - an impossible trajectory under a gold-backed system.
"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value."
- Alan Greenspan, "Gold and Economic Freedom" (1966)
The 1933 Gold Confiscation
On April 5, 1933, President Franklin D. Roosevelt issued Executive Order 6102, making it illegal for American citizens to own gold coins, gold bullion, or gold certificates. Citizens were required to turn in their gold to Federal Reserve Banks by May 1, 1933, receiving $20.67 per ounce in paper currency.
The Bait and Switch
After confiscating gold from citizens at $20.67 per ounce, the government immediately revalued gold to $35 per ounce - a 69% increase. This effectively stole 41% of Americans' wealth overnight:
- Citizens forced to surrender gold at $20.67/oz
- Government revalues gold to $35/oz
- Those who held gold illegally saw their wealth increase
- Those who complied lost 41% of their purchasing power
- The wealthy elite with foreign accounts were unaffected
Criminalization of Sound Money
Violation of Executive Order 6102 was punishable by a $10,000 fine (equivalent to over $200,000 today) and up to 10 years in prison. American citizens were made criminals for holding the same money their grandparents had used their entire lives.
Who Was Exempt?
Not everyone had to surrender their gold:
- Foreign governments and central banks
- Licensed jewelers and industrial users
- Dentists and other professionals
- Anyone with gold stored overseas
- The Federal Reserve itself
Bretton Woods (1944)
In July 1944, delegates from 44 Allied nations met at Bretton Woods, New Hampshire to design the post-war monetary system. The result established the U.S. dollar as the world's reserve currency, backed by gold at $35 per ounce. Other currencies were pegged to the dollar.
The New World Order of Money
- Dollar as Reserve: All international trade would be conducted in dollars
- Gold Backing: Only foreign governments could exchange dollars for gold
- IMF Created: International Monetary Fund established to manage the system
- World Bank Created: Originally for post-war reconstruction, later for "development"
- U.S. Dominance: America controlled 2/3 of world's gold reserves
The Triffin Dilemma
Economist Robert Triffin warned in 1960 that Bretton Woods contained a fatal flaw: to provide enough dollars for world trade, the U.S. had to run perpetual trade deficits. But running deficits would eventually undermine confidence in the dollar's gold backing. The system was designed to fail.
The Nixon Shock (1971)
By 1971, foreign governments had accumulated far more dollars than the U.S. had gold to back them. France and other nations began demanding gold for their dollars, threatening to drain Fort Knox. On August 15, 1971, President Nixon announced he was "temporarily" suspending gold convertibility. This "temporary" measure became permanent.
Nixon's Announcement
"I have directed Secretary Connally to suspend temporarily the convertibility of the dollar into gold... This action will not win us any friends among the international money traders. But our primary concern is with the American workers."
- President Richard Nixon, August 15, 1971
The Consequences
- Pure Fiat Currency: Dollar backed only by "full faith and credit" of the government
- Unlimited Money Printing: No constraint on Federal Reserve money creation
- Inflation Explosion: Dollar lost 85%+ of purchasing power since 1971
- Debt Explosion: National debt went from $400B to $34+ trillion
- Wealth Transfer: Savers punished, asset owners rewarded
Timeline
Federal Reserve Created
Central bank established. Dollar still backed by gold, but control of money supply transferred to private banking cartel.
Executive Order 6102
FDR makes gold ownership illegal for American citizens. Citizens must surrender gold at $20.67/oz.
Gold Reserve Act
Gold revalued to $35/oz after confiscation. Citizens who complied lost 41% of their wealth.
Bretton Woods Conference
Dollar established as world reserve currency. IMF and World Bank created.
Gold Drain Begins
Foreign nations exchange dollars for gold. U.S. gold reserves decline as Vietnam War spending increases.
Nixon Shock
"Temporary" suspension of gold convertibility. Dollar becomes pure fiat currency.
Gold Ownership Legal Again
After 41 years, Americans can legally own gold. But the damage is done - gold standard is gone.
Gold Hits $850/oz
Market revaluation shows true dollar debasement. Those who kept gold illegally saw massive gains.
Gold Over $2,000/oz
Gold has risen 100x from the $20.67 confiscation price, revealing the true inflation rate.
The Fiat Currency System
Since 1971, all major world currencies are "fiat" - money by government decree, backed by nothing tangible. This system has enabled unprecedented government spending, debt accumulation, and wealth transfer.
How Fiat Works Against You
- Inflation Tax: Printing money devalues your savings without visible taxation
- Cantillon Effect: Those closest to new money (banks, government) benefit most
- Asset Inflation: Stocks, real estate, art rise as dollars fall - punishing savers, rewarding speculators
- Wage Suppression: Wages rise slower than prices, making workers poorer over time
- Debt Dependency: System requires ever-increasing debt to function
"By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens."
- John Maynard Keynes