It was 45 years ago today, that Richard Nixon, in an act of sophistry worthy only of Nixon himself, unpegged the US Dollar from Gold. Prior to that date, foreign governments had been accepting payment of all debts from international trade, regardless of which country they were trading with, in dollars. An agreement was in place that other countries could exchange their dollars at will, for gold stored by the United States in Fort Knox.
Nixon, claiming that unscrupulous international forces were attacking America through its gold reserves, used that argument as an excuse to unilaterally tell the world that no more gold would be forthcoming in return for dollars. In essence, telling the world that henceforward we would be refusing to honor our debt in anything other than pieces of paper, to be printed at will by the US government.
What he effectively did was devalue the dollar. And so gasoline, being sold at approximately 25 cents a gallon, is now above $2 a gallon, and has been as high as $5 a gallon. Curiously enough, if you had one of the silver quarters from back in the day, nominally worth 25 cents, but worth far more for their bullion content today, you'd find that the silver in one of these quarters is worth about the same as a gallon of gasoline is today. So gasoline has not really gotten more expensive. Neither has silver. The only thing that has changed since then is the value of the US dollar, which should continue to drop towards zero, as all fiat currencies tend to do, given time.
Happy 45th Birthday!
Oh, and should you want to celebrate, and at the same time protect your savings, may I suggest you buy and keep silver and gold directly? Money Metals Exchange is where I buy mine.
