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989 sats \ 18 replies \ @ch0k1 31 Jan \ on: WTF Happened Before 1971? bitcoin
TLDR;
What basically happened is that the Dutch, British and French wanted almost simultaneously to buy back their gold using the dollars US had given them before which basically would cause severe inflationary problems (if not insolvency)
Is there a book or resource you'd recommend to read more on this subject?
why did they all simultaneously want to buy back their gold from America?
did they sense some sort of weakness? if so, what was the root cause of that weakness?
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they wanted it back because they got wind of the fact that the dollar backing was a mirage, there were many more dollars in circulation as there was gild to back them, so the unbacked printing was actually much older. It was just the moment of truth. And the French didn't just "ask to buy it back" - they wanted their gold, which was said to be stored in a US vault, and the US woldn't give it t them, and de Gaulle sent a literal warship.
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without going into research now, it's usually attributed to the Vietnam war, which made the givernment print and spend money to finance a losing decade-lomg war. So, when they say unbacked fiat supports wars, this is largely true, though it happened before the end of the backing - by keeping the facade up and the printer going anyway. The French saw the balances and the utflows and determined that this can't be true, and sent the ship to pick up the gold, at which point Nixon had to admit that it's not actually there to back it all.
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at which point Nixon had to admit that it's not actually there to back it all.
Did he really admit? I thought he just said it's a "speculative attack". It's hard to find credible sources around this event and time though.
Best part:
to suspend temporarily the convertibility of the dollar into gold
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don't know, tbh, but there is usually a difference between admitting pubicly and admitting internally, if only because they think the public gullible fools, while other governments at least have their own intelligence and sit on more information. At least in 1971, today it might well be the other way around...
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That was ok to defeat the British I guess
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The US has quite the history of fiat:
" Continentals were not backed by any tangible asset; they were supposed to hold their value on the Continental Congress's expectation of future tax revenues, which, given that they were in the midst of a war, created more uncertainty than the new currency could withstand.1
The Revolutionaries continued printing money and ultimately issued more than $200 million in rebel currency. Within five years, continentals suffered significant depreciation and eventually were practically worthless.3 To contribute to the devaluation of the continentals, the British produced enormous quantities of counterfeit bills to sabotage the American economy. Afterward, the colonies held considerable debt from the war."
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Simply because that was the deal explicitly written in the Bretton Woods contract... What does it matter and do you have to explain your motives to the other party when you want to exercise your rights on a particular contact?
I don't know the exact reasoning they had but I've read somewhere that after multiple rejections from the US to comply to the contract, they needed to sail to the US in order to show how serious their intentions were. 🤣
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