The claim that the dollar system worked perfectly until the Fed got greedy is pure fantasy. The post-WWII Bretton Woods system wasn't a gold standard, it was a dollar hegemony masquerading as one, a rigged game where America played banker to the world while quietly running the printing press overtime. The U.S. promised dollars convertible to gold at $35 an ounce, but only for foreign governments, while internally, the Federal Reserve and Treasury operated with the restraint of a coked-up stockbroker. This was never sustainable. By 1971, the U.S. had a mere $24 billion in gold reserves backing $140 billion in foreign-held dollars, a laughable imbalance Nixon tried to conceal with capital controls and strong-arm diplomacy. But when France, under the leadership of then-President Georges Pompidou (a former Rothschild banker who, unlike today's economists, actually understood monetary games), started demanding physical gold in exchange for its dollar reserves, the gig was up. The London Gold Pool, a desperate central bank cartel formed in 1961 to artificially suppress gold's price, collapsed by 1968, precisely because the market smelled the rot.
The idea that the Fed "matched" gold supply growth with disciplined printing is historical revisionism at its worst. Throughout the 1950s, the Fed quietly monetized Treasury debt to bankroll Cold War spending. By the 1960s, it was cranking the dollar printer into overdrive to fund Vietnam and LBJ's Great Society fantasies, policies that sent inflation to 6% by 1969, even as the Fed kept interest rates below inflation (a.k.a. financial sabotage of savers). The so-called "2% rule" was fiction; the Fed was juicing the system for political convenience long before Nixon officially torched the gold window. And let's not forget the Fed's role in the speculative Eurodollar market, where offshore dollar lending exploded without reserve requirements, an early preview of the unregulated shadow banking systems that would later implode in 2008.
The fatal flaw was baked into the Bretton Woods design from day one, a paradox economist Robert Triffin warned about in 1960: To serve as the world's reserve currency, the U.S. had to supply dollars globally, but the more dollars it printed to meet demand, the shakier confidence in its gold backing became. This wasn't an accident; it was a structural time bomb. By the late 1960s, foreign central banks were drowning in dollars they couldn't redeem without triggering a run on Fort Knox. Meanwhile, the U.S. hollowed out its own industrial base, outsourcing manufacturing to Asia and Germany while replacing real production with financialization, Wall Street alchemy turning debt into "wealth."
Fast-forward to today, and the chickens are coming home to roost with a vengeance. The dollar's purchasing power has cratered, 92% loss since 1971. The national debt has ballooned to $35 trillion, nearly triple U.S. GDP. Decades of negative real interest rates have turbocharged asset bubbles, turning housing into a speculative casino while wages stagnate. And now, thanks to Washington's rampant weaponization of dollar sanctions, the BRICS nations are actively dismantling the dollar's reserve status, with China stockpiling gold and brokering oil deals in yuan. The Fed's response? More printing, more deficits, more pretending the laws of monetary gravity don't apply.
The breakdown wasn't caused by "abuse" of the dollar system, it was the inevitable result of a system designed to be abused. Fiat currencies don't fail because people mismanage them; they fail because they enable mismanagement. Gold didn't collapse in 1971, the U.S. government simply abandoned it to avoid fiscal accountability. Now we're stuck with the consequences: a financialized husk of an economy where billionaires mint fortunes in leveraged speculation while workers get paid in depreciating digits.
I have question. If new value is produced in the system (say an iphone or google search), isn't it ok to produce more dollars to represent that value, which is also the reason why people didn't care for decades, because the system was working.
You're asking the right question but the answer isn't the Fed's money printer, it's the real economy's ability to back that money with actual productivity. Yes, an iPhone or Google search creates value but not all value is equal in monetary terms. The dollar's legitimacy hinges on scarcity and trust, not just raw economic output. If you could print money every time someone coded an app or assembled a gadget, Venezuela would be an economic superpower.
In a gold system you get rich by innovating, building, and trading. Not gaming financial systems. No Fed to bail out failed banks or corrupt hedge funds. Modern "hoarders" thrive because JP Morgan can lose billions, then get free Fed loans. Tech CEOs pump stock prices with buybacks, not R&D. Politicians borrow trillions, stick taxpayers with the bill. Under gold, these parasites starve. Gold forces all wealth to prove its worth in the free market.
The #1 driver of modern wealth inequality is fiat-fueled asset inflation. The rich own stocks, real estate, and hard assets, which soar as money is printed. The poor own cash and labor, which get crushed.
Hard money (gold) forces productive capitalism. Easy money (fiat) breeds crony oligarchy. The fear that gold leads to wealth hoarding is a myth. In reality, gold has built-in discipline mechanisms that punish idle capital and force productive use of wealth. The exact opposite of today's fiat-driven oligarchy.
Unlike fiat currency (which rots at 2-10% yearly inflation), gold appreciates in purchasing power over time as the economy grows (real deflation). Hoarding cash results in wealth growth, so saving is rewarded. But unproductive hoarding carries an opportunity cost because gold doesn't pay interest or dividends.
The wealthy can't just sit on mountains of gold. They must invest it to earn returns, fueling productive enterprise. In 19th-century Britain, capital flooded into railroads, factories, and infrastructure, not Wall Street derivatives.
Compare that to today's fiat hellscape where the rich park wealth in low-yield bonds, speculative bubbles, or offshore tax havens and central banks bail out hoarders (2008 bank rescues, 2020 PPP "loans" for billionaires).
Under fiat regimes, the politically connected get new money first (banks, corporations, government contractors) before inflation hits the working class. Gold eliminates this. No central bank can create gold out of thin air to enrich cronies. All wealth accumulation must come from actual production. No Fed-backed stock buybacks or real estate bubbles. No "passive income aristocracy" living off monetary inflation. Capital flows to useful ventures (factories, tech, agriculture), not unproductive asset-stripping.
Under gold, interest rates are set by real savings, not central planners. This means that reckless spending gets punished and long-term investing gets rewarded. If the rich hoard gold without investing, interest rates naturally rise (less gold available for loans), forcing them to deploy capital or lose out. Contrast this with yesterday's Fed-set near-zero rates, which allowed billionaires to borrow cheaply and speculate endlessly without real productivity. In the 1800s, Vanderbilt couldn't just borrow free money from the Fed to buy up railroads. He had to convince investors with real profits.
Unlike feudal systems (where land means power) or modern equities (where BlackRock/Vanguard dominate), gold's physical nature prevents monopoly hoarding. No "too big to fail" banks because gold can't be bailed out. No endless financialization because hard money kills derivatives casinos. And it's easily tradable because unlike real estate or fine art, gold circulates freely. The wealthy can't lock up the system. Gold moves to where it's most useful, not where it's politically protected. Bring back hard money. Watch the rentier class collapse.
I think Fed's money printers make all the entreprenuers chase value creation. It's like accelerated Red Queen Hypothesis. They are keeping everyone on their toes to gather as much of future new money as possible (that will be printed in future) at the same time creating value. My problem is if people just sit on the gold and not allow it to circulate and suffocate the economy because the gold hoarders would be rest assured that value will be eventually created in the system and their gold would appreciate and capture that value so they don't even try.
The idea that the Fed "matched" gold supply growth with disciplined printing is historical revisionism at its worst. Throughout the 1950s, the Fed quietly monetized Treasury debt to bankroll Cold War spending. By the 1960s, it was cranking the dollar printer into overdrive to fund Vietnam and LBJ's Great Society fantasies, policies that sent inflation to 6% by 1969, even as the Fed kept interest rates below inflation (a.k.a. financial sabotage of savers). The so-called "2% rule" was fiction; the Fed was juicing the system for political convenience long before Nixon officially torched the gold window. And let's not forget the Fed's role in the speculative Eurodollar market, where offshore dollar lending exploded without reserve requirements, an early preview of the unregulated shadow banking systems that would later implode in 2008.
The fatal flaw was baked into the Bretton Woods design from day one, a paradox economist Robert Triffin warned about in 1960: To serve as the world's reserve currency, the U.S. had to supply dollars globally, but the more dollars it printed to meet demand, the shakier confidence in its gold backing became. This wasn't an accident; it was a structural time bomb. By the late 1960s, foreign central banks were drowning in dollars they couldn't redeem without triggering a run on Fort Knox. Meanwhile, the U.S. hollowed out its own industrial base, outsourcing manufacturing to Asia and Germany while replacing real production with financialization, Wall Street alchemy turning debt into "wealth."
Fast-forward to today, and the chickens are coming home to roost with a vengeance. The dollar's purchasing power has cratered, 92% loss since 1971. The national debt has ballooned to $35 trillion, nearly triple U.S. GDP. Decades of negative real interest rates have turbocharged asset bubbles, turning housing into a speculative casino while wages stagnate. And now, thanks to Washington's rampant weaponization of dollar sanctions, the BRICS nations are actively dismantling the dollar's reserve status, with China stockpiling gold and brokering oil deals in yuan. The Fed's response? More printing, more deficits, more pretending the laws of monetary gravity don't apply.
The breakdown wasn't caused by "abuse" of the dollar system, it was the inevitable result of a system designed to be abused. Fiat currencies don't fail because people mismanage them; they fail because they enable mismanagement. Gold didn't collapse in 1971, the U.S. government simply abandoned it to avoid fiscal accountability. Now we're stuck with the consequences: a financialized husk of an economy where billionaires mint fortunes in leveraged speculation while workers get paid in depreciating digits.