In 1944 an agreement was reached at Bretton Woods that established the US Dollar as the reserve currency for the world. The dollar was used to back the other currencies of the world. The value of other currencies throughout the world were pegged to a certain dollar value, and the value of the dollar was defined as equal to 1/35th of an ounce of gold. In this way the world was on a gold standard and money throughout the world had true value (not fiat value) in that it was convertible to gold (by foreign governments – US citizens were not allowed to own gold).
The US government failed to meet it’s obligations and continued to print more money than it had gold to back it. If you say the dollar is exchangeable for a set amount of gold then you can’t print more unless you have more gold (otherwise you are lying – being immoral in your economics). The government was inflating the money supply and stealing from the American public in the form of deceptive taxes as I pointed out in my last post. But the rest of the world did not yet have the same problem as the American public. Those foreign governments could easily exchange every $35 for an ounce of gold from the US treasury.
Nixon ended this in 1971 when he took the dollar off the gold standard (watch the video at the end of this post). One day the US government said the dollar was equal to and exchangeable for 1/35th of an ounce of gold and the next day that promise was no longer made. That change of contract is an example of the worthlessness of the word of any government and part of the reason why the dollar is so removed from any real value today.
In 2006 Ron Paul spoke before the House of Representatives on the end of the dollar. He explained in a much more complete way the whole process of the changes in the value of the dollar from WW2 until today. He ends his talk with a statement that is slowly coming true today:
The economic law that honest exchange demands only things of real value as currency cannot be repealed. The chaos that one day will ensue from our 35-year experiment with worldwide fiat money will require a return to money of real value. We will know that day is approaching when oil-producing countries demand gold, or its equivalent, for their oil rather than dollars or Euros. The sooner the better.
Our hope doesn’t have to be in government in order to see what government is doing each day to increase its power and continually put the public into greater dependence on it. We cannot stand idly by and allow those in Washington to continue to ruin this nation. A vote for those who continue these policies is a vote for those who would destroy our nation. I will not stand by and let it happen. The path we continue to be on may be judgement for a wholesale rejection of righteousness in every area of life. We must seek to act righteously in every are of life and repent of our lack thereof.
Watch as Nixon explains his ending the gold standard: