The Future of the Gold Standard and the Collapse of the Dollar
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Understand the Legacy of Monetary Defaults
The closing of the gold window by Nixon in 1971 marked a significant shift away from the gold standard, which had previously allowed foreign entities to exchange Federal Reserve notes for gold. American citizens, however, were prohibited from owning monetary gold since 1933, limiting their ability to back currency with real value. The U.S. government financed extensive spending in the 1960s through large deficits, akin to modern quantitative easing, which led to distrust among foreign creditors regarding the U.S.'s gold reserves. This culminated in a default when obligations to convert notes into gold could no longer be met. The transition to a fiat currency system initiated in 1971 has led to the current instability of the dollar, which risks losing its status as the world’s reserve currency—a position it has maintained despite substantial depreciation since the 1970s. An impending collapse of the dollar is anticipated, with a potential return to a gold standard, albeit without the dollar itself.
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