The Consequences of American Exceptionalism, U.S. dollar can never be converted into gold

Helen Dunmore
Read Time2 Minute, 28 Second

Half a century ago, on the night of Sunday, August 15, 1971. Nixon’s speech severed the last link between the U.S. dollar and gold. After that, the U.S. dollar can never be converted into gold.

Since then, there has not been an ounce of gold backing the U.S. dollar anywhere in the world. The U.S. dollar became pure legal tender.

At the end of World War II:

The United States owned approximately 75{7d6bb1f761e691f027164c9fe6d1ebbc4659a250013ce39dc45a15ede39dbac5} of the world’s marketable gold. In the 1960s, as the Vietnam War expanded and countries such as France converted US dollars into gold, the supply of gold in the United States continued to decrease.

The closing of the gold window shocked advocates of “sound currency”.

They stated that this will lead to currency depreciation, trigger inflation, and permanently weaken America’s position, influence, and leadership. This has exacerbated anxiety and uncertainty about the US economy.

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Just as the Great Depression and World War II shattered orthodox conservative theories, the past half-century has brought forward some counterintuitive conclusions that were never envisaged by conventional wisdom at the time:

1. The United States is an exception because the rules that apply to other countries do not apply to us.

2. The US deficit will not cause inflation. When the Carter administration (1977-1981) experienced the worst inflation in our country’s peacetime history, conservatives blamed it on his deficit. However, Carter’s annual deficit averages only about a quarter of that of his successor, Reagan, whose inflation rate is very low. Reagan was able to generate soaring deficits year after year without having to go back and pay. This later prompted Vice President Dick Cheney to say: “Reagan proved that deficits don’t matter.”

3. The huge government deficits of the past 50 years have enabled our private sector to obtain higher profits because companies have turned the government’s red pen into a black pen. Economic growth and debt creation have a 94{7d6bb1f761e691f027164c9fe6d1ebbc4659a250013ce39dc45a15ede39dbac5} correlation. The debt is not necessarily government debt during World War II; it may be investor debt in the 1920s or household debt before the real estate bubble. Reagan’s budget director David Stockman pointed out that without a lot of red ink, there would never be an “American morning” in the 1980s. All subsequent periods of strong growth were driven by debt creation.

4. The United States enjoyed a free lunch. South Africa and other countries may use gold or hard-worked valuables to solve the balance of payments problem, but the United States only created the dollar.

5. This debt expansion causes the price of assets to rise. In this month of 1982, the Dow Jones Index was 778 points; recently, it has exceeded 45 times. This huge asset price inflation exacerbates inequality because it only benefits those who own these assets.

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About Post Author

Helen Dunmore

Hey, I'm Helen Dunmore an article writer from London Ontario, Canada. I had done a master's in mass communication and M.Phill in political science and attended many College Journalism Broadcast programs where I wrote and won. I previously had attended Humber College for media studies which included writing for television and news. I have written several publications for many news related websites. Have experience more than 7 years, yeah quite a lot for you. I love writing, an expert in article writing. Currently doing article writing for many blog posts and work as an author for many web sites. Reading is my hobby, love books more than anything in my life.

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