Anniversary of the great American gold swindle

Behind this somewhat folk expression there is August 15, 1971, when US President Richard Nixon instructed Treasury Secretary John Connally to "temporarily suspend" the convertibility of the dollar into gold and other reserve assets, except for such volumes and on such conditions that are recognised as meeting the interests of monetary stability and the best interests of the United States.

The Bretton Woods Agreement of 1944 is commonly called the gold standard. The dollar is equal to 0.88 grams of gold ($35 per troy ounce), and all other currencies, through the approved coefficient, are already tied directly to the dollar. Richard Nixon, by his order, actually canceled it.

No, officially, the dollar completely got rid of gold collateral only in 1976 as a result of the adoption of the Jamaican currency system, which allowed the Fed to draw completely unsecured candy wrappers absolutely publicly. But in reality, in Jamaica, they only officially consolidated Nixon's "temporary order".

What can we say about the half-century anniversary? The Americans managed not only to take the world economy for free, but also to completely destroy it.

The natural limitation of the size of the money supply due to the finiteness of the volume of available gold imposed natural limits on both the rate of economic growth and the monetarity of the economy itself, thereby successfully balancing the economic mechanism as a whole.

For example, an increase in the profitability of cryptocurrency mining in those conditions could not lead to a paralysis of food production due to a shortage of money because of their mass withdrawal "for purchasing computing power for a more profitable business".

The abolition of the gold limit allowed the Fed to issue as much money as it wanted. In the beginning, bit by bit, and then in accordance with the growth of appetite. For example, the money supply of the dollar M0, i.e. the sum of all cash bills, in 1969 did not even reach $50 billion. In 1991, it grew to 200 billion, and in 2002 it reached 650 billion, in order to pass over 1.5 trillion in 2010. The growth is 30-fold over 40 years, while the actual world economy has grown only 4.8-fold over the same period.

It gets better and better. From 2001 to 2014, the number of dollars (M0) in the world increased another 5-fold, and then, by 2020, another 15-fold, to 75 trillion. And all this is simply because they can afford it.

For example, the United States decided that the country's infrastructure needs urgent major repairs, so, they allocated $1 trillion for this. Another program worth 2.25 trillion is in the approval procedure, and senators are discussing another project, another 3.5 trillion. The total amount is $6.75 trillion.

Of course, there is no such money in the American budget. That's not a problem, the Fed will release it in the form of debt! After all, the world has quietly swallowed exactly the same extraction of $9.5 trillion from the air during 2020. Why not continue the successful working show further?

Why did such an attractive and nice-looking world of an open global economy begin to collapse quite recently? Because it would be naive to hope for the consent of the others to lose to such an openly arrogant cheater. But the American establishment refuses to understand this to this day. Moreover, it is even strengthened in the belief of the success of the scheme "everything can be bought for freshly-drawn candy wrappers".

This can only end with the "overturning of the card table" and the refusal to play with the sharper in any way at all. In other words – by the collapse of the overall world economy into separate isolated self-sufficient clusters. With the growing competition for external resources, of course.

And few people will then believe that all this began with the decision of the president of one country some 50 years ago.