I had read it was abolished in 1971, but I also read it was in 1933. Which one is it? Also, why was it abolished in the first place?
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The gold standard was officially abolished in 1970. They did this for many propaganda reasons, such as inflation is good for the people and what not, but I believe this was their way of declaring bankruptcy as good news. Like saying it’s a feature not a bug.
They borrowed too much against gold and couldn’t pay it back. So rather than trying to pay back the debt, they just decided to declare a fake fiat standard instead.
Since 1970, gold, real estate, and stocks (assets that store their value), all increased at 6-8% on average in the last 50 years.
Perhaps coincidentally, the M2 money supply has also grown at 7.1% since 1970 as well, from $589billion to $20.8trillion.
The reason the consumer price index only reports 3.5% over that period is because the CPI doesn’t measure inflation of the money supply, it measures increases in consumer spending. And over that same period, average salaries only increased at 3.5% – a perfect match.
Intuitively, consumers cannot increase their spending unless their salaries increase, especially if they are living paycheck to paycheck (which the majority of citizens are).
Not an ELI5, but I found this video helpful and interesting https://youtu.be/NJd6RKsY5H4?si=eZmhqVUJP6nV-Pm_
Didn’t the (American) Vietnam War also contribue to dropping the gold standard?
Didn’t the (American) Vietnam War also contribue to dropping the gold standard?
Many people here are going to give reasons for why we “needed” to get off the gold standard. But note that this is a debated topic. If you want to learn more, you can research the difference between Keynesian and Austrian economics. Most Redditors are presumably more on the side of Keynesian economics.
Austrians believe in some sort of gold standard and will use examples like this to show what a disaster it has been since we got off the gold standard: https://wtfhappenedin1971.com/
Many people here are going to give reasons for why we “needed” to get off the gold standard. But note that this is a debated topic. If you want to learn more, you can research the difference between Keynesian and Austrian economics. Most Redditors are presumably more on the side of Keynesian economics.
Austrians believe in some sort of gold standard and will use examples like this to show what a disaster it has been since we got off the gold standard: https://wtfhappenedin1971.com/
If you want to do a deep-dive into the topic of how our monetary system works (and the history about how we got there), I really suggest the book “Broken Money” by Lyn Alden.
If you want to do a deep-dive into the topic of how our monetary system works (and the history about how we got there), I really suggest the book “Broken Money” by Lyn Alden.
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