Tag Archive for Gold Window

Today in History: President Nixon Closes the Gold Window

45 years ago today, on August 15, 1971, President Richard Nixon officially closed the gold window. While US citizens had been forbidden from owning gold or from redeeming their gold certificates for gold coins since the early 1930s, foreign governments still had the privilege of redeeming their dollars for gold. Due to the Federal Reserve’s inflationary monetary policy during the 1960s, foreign governments began to redeem more and more dollars for gold. Attempts to encourage other governments (especially France) not to redeem their dollar holdings were unsuccessful, and there was a very real threat that US gold holdings might eventually be exhausted. So President Nixon decided to close the gold window, thus severing the final link between the US dollar and gold. The removal of the restraint of gold redemption freed the Federal Reserve to engage in more inflationary monetary policy than ever. The effects of that on money supply and official price inflation figures are readily apparent.

Consumer Price Index

Consumer Price Index

M2 Money Supply

M2 Money Supply

The demonetization of silver in the Coinage Act of 1873 was widely assailed by its critics as the “Crime of ’73.” Isn’t it about time that Nixon’s closing of the gold window be known as the Crime of ’71?

A Brief Monetary History Of The United States: Part VII

Today we bring you Part VII of “A Brief Monetary History of the United States” from the Ron Paul Monetary Policy Anthology. The full series can be found at the following links:

  • Part I – Colonial Money and the Coinage Act of 1792
  • Part II – The Banks of the United States, McCulloch v. Maryland, and Private Coinage
  • Part III – Government Begins to Monopolize Currency
  • Part IV – The Legal Tender Cases and the “Crime of ’73”
  • Part V – The Rise of the Fed
  • Part VI – The Great Depression, Gold Confiscation, and the Gold Exchange Standard
  • Part VII – The Dollar Reigns Supreme: From Bretton Woods to Stagflation
  • Part VIII – The 1980s to the Great Recession and on to the Future
  • V. THE DOLLAR REIGNS SUPREME

    Bretton Woods and Gold

    Mount Washington Hotel, site of the Bretton Woods Conference. Image: Richard Hicks

    Mount Washington Hotel, site of the Bretton Woods Conference. Image: Richard Hicks

    In the aftermath of World War II, the United States cemented its position as the world’s largest and most powerful economy. The new international monetary order created at Bretton Woods, New Hampshire in 1946 was based in part on the gold-exchange standard of the 1920s, only with the dollar as the sole international reserve currency—since it was as good as gold. All countries tied their currencies to the dollar at fixed exchange rates, with the dollar being defined as FDR had left it, at 1/35 ounce of gold (i.e. $35 per ounce of gold). While individuals in the United States were still unable to own gold or to redeem their dollars for gold, foreign governments were able to cash in their dollars to the U.S. government and receive gold in return, a process that became known as the “gold window.” While the United States would pyramid its dollar issue on top of its gold reserves, other countries were supposed to hold dollars, and not gold, as their primary foreign exchange holdings.

    ISIS, Saudi Arabia, and the Threat to the Dollar

    The emergence of the Islamic State (hereafter referred to as ISIS) in the Middle East, the apparent ease at which it has taken over large parts of Iraq and Syria, and the well-publicized barbarity of its fighters towards their enemies has led to increased calls for renewed military intervention in the Middle East. But the…

    Punished for the Sins of Our Fathers

    Punished for the Sins of Our Fathers A news report a little over a week ago mentioned a woman who tried to travel to the Philippines with $40,000 in cash hidden on and about her person. Whether she knew it or not, it is a crime to transport more than $10,000 of monetary instruments into…