The Humble Libertarian

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Monday, April 23, 2012

Nixon, Gold and Oil

What caused the dollar to be de-tethered from gold? The welfare-warfare state.
The Vietnam War was going to cost the US $500 Billion. The stark reality was the US simply could not print enough money to cover its war costs, it’s gold reserve had only $30 billion, most of its reserve was already backing existing US dollars, and the government refused to raise taxes. In the 1960s President Lyndon B. Johnson’s administration declared war on poverty and put in place its Great Society programs...During the Nixon administration welfare programs underwent major expansions. States were required to provide food stamps. Supplemental Security Income (SSI) consolidated aid for aged, blind, and disabled persons. The Earned Income Credit provided the working poor with direct cash assistance in the form of tax credits and welfare rolls kept growing....Bretton Woods collapsed in 1971 when Nixon severed (known as the Nixon Shock because the decision was made without consulting the other signatories of Bretton Woods, even his own State Department wasn’t consulted or forewarned) the link between the dollar and gold – the US dollar was now a fully floating fiat currency and the government had no problem printing more money. Because of the massive printing of the US dollar to cover war and welfare reform costs Nixon worried about the strength of his country’s currency....
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Judy Morris,
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