RE: RE: Is fiat money safe and cryptocurrencies unsafe?
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RE: Is fiat money safe and cryptocurrencies unsafe?

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4y

I think you are wrong, because anyone who knows about history knows very well that before the Breton Wood treaty, in the US you could go, for example, to the Federal Reserve with the amount of dollars equivalent to a gold bar; and they would sell it to you without problem. In other words, there was free convertibility, which would not have been possible if there had not really been a gold standard.

It is true that the US had been trying to get rid of the gold standard since long before. In fact, it is said that since the Roosevelt administration there were already measures to make gold stop being in private hands and be in the hands of the government; but what determined that in the 70s of the 20th century the Nixon government decided to completely abandon the gold standard, was to be able to finance the Vietnam War. And it makes perfect sense, because how do you supply an army with supplies if you don't have enough money to pay the suppliers. Let's remember that everything in the US (including the weapons part) works on the basis of contractors, who if you don't pay them with hard cash, they don't provide you with supplies.

For the same reason, the US needed to be able to create money at will (Federal Reserve notes), in order to pay its obligations and debts; and the gold standard only tied his hands and feet so that he could not issue much more money than he could guarantee through his securities. Here is the background of the abandonment of the gold standard by the US, the rest is history; that is to say, then all the countries of the world also began to abandon the gold standard and the silver standard and what many call "the era of inflation and recession" began; because what the US didn't fully understand by then, is that if you create a lot of something, you devalue its value, and if you devalue its value, then you generate inflation.

It is true that the banks provided (even before the abandonment of the gold standard), a certain monetary elasticity (as you well said), but that did not mean that they could issue money left and right, and it did not mean easy credits, nor interest rates like the ones we see today. With the gold standard, there was a certain order that had to be respected, and this guaranteed the stability of the currency, but not of the governments and their purposes, because he remembers that once J.P. Morgan himself (the tycoon, not the banking institution), had to save the US government's ass by lending him money; because he had run out of gold paying debts contracted with foreign countries to finance wars and other purposes.

In short, it is a subject as interesting as it is important. Thanks for comment.

@onlycrypto: I think you are | Ecency