This is a continuation of the article When Gold was Banned in the US.
To protect the little money they did have, those Americans who did still have it during the Great Recession hoarded gold, making it more challenging for the government to acquire gold and begin printing money to boost the economy.
Most people have moved on sooner or later. Meanwhile, it appeared to be a wise choice to outlaw the ownership of gold.
This system functioned fairly flawlessly in the beginning. The United States was significantly less affected by World War II than Japan and Europe were. Because there was such a large demand for US goods, it only made sense to adopt the US dollar as the accepted global currency.
In the 1960s, when the economies of Europe and Japan started to expand, the need for US dollars decreased. as the competitiveness of goods from Europe and Japan increased The Federal Reserve nevertheless kept printing money despite the fact that its gold reserves were barely growing.
This ultimately resulted in a scenario where foreign nations had more US currency than gold that the Federal Reserve had. Foreign nations had the legal right to swap US dollars for gold, but because the US dollar was valued at $35 per ounce of gold, doing so would cause the federal reserve to run out of gold and, in effect, declare bankruptcy.
The Federal Reserve is forced to start over.
To keep up with the money printing, more gold was required. However, it was unable to simply outlaw gold globally and hoard all of the wealth this time. As a result, the United States decided to implement the gold standard's abolition as the sole course of action.
The United States would no longer exchange dollars for gold, according to President Nixon's announcement on August 15, 1971. He gave Secretary Connelly the go-ahead to temporarily halt the conversion of the dollar into gold and other reserve assets, save for specified amounts and circumstances determined to be in the best interests of the United States and monetary stability.
As soon as the US dollar was no longer backed by gold, there would be a sudden explosion in inflation as a result of consumers significantly losing confidence in the US dollar. The harm had already been done, thus there was no longer any justification for the Federal Reserve to want to accumulate all of the gold in the country.
On December 31, 1974, President Ford would sign Executive Order 11825 revoking the earlier Executive Order that President Roosevelt had enacted 41 years earlier. Congress would enact laws on the same day permitting Americans to hold gold once more.
A few years later, in 1977, it would truly eliminate the president's power to control gold unless the United States was at war.
The Gold Bullion Coin Act was passed into law by President Reagan on December 17, 1985, allowing the US Mint to create gold coins from "newly mined domestic sources." The most popular gold coin in circulation today is the gold American Eagle.
Therefore, the question still stands: Could it happen again? The future? Of course it's feasible; it's been done, and when under pressure, governments just amend the laws.
The bottom line is there was confiscation. Although it was overturned, it might yet occur in the future. Laws may change and do.
Sources:
Historian, Federal Reserve, Forbes, Center Rule for Law, UBSB, US Gold Bureau
All photos were taken by me with my iPhone.
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