Decomposed > BTW, I'm being serious. There's nothing that says gold-backed currency has to be in the form of gold coins. It could just as easily be in the form of bearer bonds that allow the holder to redeem each note for one millionth of an ounce of gold (one ounce minimum). Such notes would be exchangeable as money, would work just fine and would NOT be fiat currency.
For some reason . . .
I'm thinking 'Tricky Dick' Nixon had a problem with U.S. Gold being 'redeemed' with U.S. dollars to the point that the U.S. would soon not have enough gold to cover its assets.
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Who Really Killed the Gold Standard?
http://nationalinterest.org/feature/who-really-killed-the-gold-standard-12435
While Nixon is usually blamed, LBJ played a large role in the gold standard's demise.
The received truth about the elimination of the gold standard in the United States (and by extension, the U.S. Dollar being the world’s reserve currency, throughout the rest of the world) is that “Nixon did it”. While it is true that President Nixon, on August 15, 1971, suspended the convertibility of the U.S. Dollar into gold in international transactions, thereby ending the Bretton Woods regime and putting the “final nail in the coffin” of the gold standard, Nixon’s action was pre-ordained by what LBJ had done three and a half years earlier.
On March 19, 1968, President Johnson signed a bill eliminating the “gold cover” (i.e., the reserve backing by gold) for Federal Reserve notes. Prior to the removal of the gold cover, each Federal Reserve Bank had been required to hold a gold certificate reserve of not less than 25 percent against its Federal Reserve note liability. (The gold certificates represented gold actually held by the United States Treasury.) When the gold cover requirement was removed in March of 1968, the ratio of the gold stock of the U.S. to the total Federal Reserve note liability stood at 25.0084 percent. (The Gold Cover, Joseph C. Ramage, Monthly Review of the Federal Reserve Bank of Richmond, July 1968, pages 8 - 10). (See right side of graph, Gold Reserve and Federal Reserve Note Liability.)
Immediate reaction at the time of the removal of the “gold cover” in March of 1968 was “negligible”, according to Joseph C. Ramage, the Richmond Federal Reserve official who chronicled the change in the law. (The Gold Cover, page 10.) But Mr. Ramage warned that the 1968 change could lead to a “parallel” with the 1965 change in the law that eliminated the gold reserve requirement for deposits of member banks held at the Fed. Over the three years following that 1965 elimination of the deposit reserve requirement, the U.S. gold reserve ratio dropped from well over 40 percent of Federal Reserve note liability to just over 25 percent. (See graph referenced earlier.)
The precipitous decline in the gold reserve cover ratio between 1965 and 1968 was mainly due to two factors: First, there was an outflow of gold from U.S. gold reserves (in blue in the graph, US Federal Reserve Bank Gold Holdings). The net “earmarked” gold held for foreign accounts (in green in the graph, US Federal Reserve Bank Gold Holdings) did not decline materially. The outflow of gold from U.S. stocks was the result of foreign governments aggressively swapping gold for the dollars that were piling up overseas, as the U.S. balance of trade worsened. Second, there was a rapid increase in Federal Reserve Note liability, as dollars were created at an increasing pace. (See left side of graph, Gold Reserve and Federal Reserve Note Liability.)
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(Article does continue.)
Zim : It seems the demo-rats (Johnson) desire to spend money we ain't got was constrained by various laws and the Gold Standard . . . They managed to get around it and 'We' suffered great inflation.
'Gold' in the name of bearer bonds . . . Some countries with fiat currencies and others not . . . and Trade imbalances requiring the transfer of gold . . .
I suspect if we had True 'Fiscal Responsibility' amongst various 'leaders' and 'poloticians' . . . Fiat currency would work just fine. But given the craven corrupt lying thieving poloticians we got . . . I don't think even a 'Gold Standard' would work for very long.
Zim.
Mad Poet Strikes Again.
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