Gold Wars! USA History of Pretend.Submitted by Mark Twain on Wed, 10/05/2011 - 10:46
- The Early Gold Wars
- War Declared - 1933-34
- The End Of the "Fixed" Dollar
- Gold War I - The "London Gold Pool" - 1961 to 1968
- Gold War II - The IMF/U.S. Treasury Gold Auctions - 1975 to 1979
- The Paper Era Begins
Five of the Biggest Bull Markets in History
The Early Gold Wars
The Congress shall have power ...to coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures."
1787 - The Constitution of the United States - Section 8
That is precisely what the Congress did. In 1792, the Dollar was fixed by law at 24.75 grains or 0.05156 troy oz. of Gold. In 1837, the coinage was reworked and the Dollar was defined at 25.8 grains of Gold "nine-tenths fine". That gives 20.67 Dollars to one troy oz. of Gold. That was the Dollar's "fixed value" (see the quote above) for 96 years from 1837 to 1933.
War Declared - 1933-34
March 4, 1933
Not quite 20 years after the establishment of the Fed, President Franklin D. Roosevelt was inaugurated for his first term in office.
March 6, 1933
Using a wartime statute passed in 1917, Mr Roosevelt issued a proclamation closing every bank in the U.S. for four days. The banks were closed from March 6 to March 9.
March 9, 1933
Day One of "The Hundred Days". The President called a Special Session of the newly-elected Democratic Congress for the purpose of debating an act prepared in advance by the President's advisors. In a few hours, with minimal if any debate, Congress passed the act: "to provide relief in the existing national emergency in banking, and for other purposes".
April 5, 1933
President Roosevelt, acting under the sweeping authority passed to him by Congress on March 9, signed Presidential Executive Order 6102 which invoked his authority to make it unlawful to own or hold gold coins, gold bullion, or gold certificates. The export of Gold for purposes of payment was also outlawed, except under license from the Treasury.
... By January of 1934, the "adjustable Dollar policy" was an obvious and perceived failure, and it was dropped. The NRA itself was declared Unconstitutional on May 27, 1935.
January 30, 1934
The "Gold Reserve Act" became law. It had passed through Congress in five days, with minimal debate... Federal Government took away title to all "Gold Certificates" and gold held by the Federal Reserve Bank (the independent Fed?) and vested sole title with the U.S. Treasury. The Fed banks were to be provided with "Gold Certificates" in return for their Gold, but these certificates had no specific value in Gold assigned to them. When one witness testifying before the Senate Committee protested, he was taken aside by an Administration Senator and the situation explained to him:
"Doctor, you don't understand about these gold certificates. These are not certificates that you can get gold. These are certificates that gold has been taken away from you."
January 31, 1934
The day after the passage of the Act, President Roosevelt fixed the weight of the Dollar at 15.715 grains of Gold "nine-tenths fine". The Dollar was thereby devalued from $20.67 to one troy ounce of Gold to $35.00 to one troy ounce of Gold - or by 69.3 percent...
Gold War I - The "London Gold Pool" - 1961 to 1968
... U.S. Gold reserves were falling... U.S. and Europe should pool their Gold resources... Central Banks of the U.S., Britain, West Germany, France, Switzerland, Italy, Belgium, the Netherlands, and Luxembourg set up the "London Gold Pool" in early 1961.
... French, under Charles de Gaulle, reneged and began to send the Dollars earned by exporting to the U.S. back and demanding Gold rather than Treasury debt paper in return. Under the terms of the Bretton Woods Agreement... 1944, France was legally entitled to do this. The drain on U.S. Gold became acute... London Gold Pool folded... 1968...
...[President Nixon] repudiated the international obligation of the U.S. to redeem its Dollar in Gold just as President Roosevelt had repudiated the domestic obligation in 1933. On August 15, 1971, Mr Nixon closed the "Gold Window". The last link between Gold and the Dollar was gone. The result was inevitable. In February 1973, the world's currencies "floated". By the end of 1974, Gold had soared from $35 to $195 an ounce. ...
The Paper Era Begins
In early 1980, Mr Volcker's new Fed policy ... U.S. interest rates began to skyrocket... The U.S. Prime rate hit 20% in April 1980...
... Way back in March 1971... "permanent" U.S. debt ceiling had been frozen at $US 400 Billion...
... explosion in U.S. debt... U.S. being the world's "reserve currency", the way was in fact cleared for a debt explosion right around the world...
Biggest Bull Markets in History, 1982 - 2006
- The global stock market boom of 1982-87
- The Japanese stock market/real estate boom of 1988-90
- The Dow (and then Nasdaq) led boom - late 1994 to March/April 2000
- The great global real estate boom of 2002-06
- The global stock market revival of 2006-07