How Ending The Gold Standard Impacted The US Economy

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by Daniel Carter
Politicians, economic “experts” and the talking heads in mainstream media will never tell you that monetary policy is the most important issue facing the United States. Whether you realize it or not, monetary policy has a direct and significant impact on all our lives. When the US abandoned the gold standard in the early 1970’s, it steered our economy toward a cliff that we are closer than ever to driving over.
Once the gold standard ended, the Nixon administration went to Saudi Arabia to strike up a deal that would give immense power to the US’s rent-seeking elites for many decades to come. This deal created what’s known as the Petrodollar system. In exchange for weapons and military support, the Saudis agreed to sell their oil exclusively in dollars. Eventually this deal spread to almost every other oil producing nation.
Because the US was able to create extremely high demand for their paper currency, they could print (or create digitally) a ton of it at will. The US’s clever negotiations helped it build the vast empire that we know today. However, it came at a great cost to ordinary US citizens. It has come at a great cost to people living in the Middle East as well because the US has had to overthrow their governments to keep the petrodollar system alive.
When the US floods the US and world economies with new money, it first goes through our banking system. Then, it flows to well-connected individuals, corporations and governments. Finally, it may flow down to some ordinary citizens. When people talk about “trickle-down” economics, they are not talking about this system. But they should be.
Massive money creation eventually leads to inflation, which eats away at the value of your dollars. The rent-seeking elites are much more equipped to handle this because they receive the newly created money first. Ordinary people, however, see their quality of life stagnate.
This is nowhere near the first time an empire has resorted to such methods. Almost every empire devalues its currency to fund the extravagancies of the elite. Then, when the currency is devalued to the point where it is almost worthless, the empire collapses. One of the oldest examples of this occurring was during the final stages of the Roman Empire.

 
Now, I’ll take you through a few charts that show how the end of the gold standard has damaged the US economy and put the empire closer to collapse.
First, let’s look at how the end of the gold standard impacted our national debt levels. Before the gold standard was ended, US national debt was well under $1 trillion. After almost five decades without a gold standard, the national debt is now over $20 trillion and is set to go a lot higher in the coming years.  

Debt has exploded in large part due to the petrodollar deal. The Saudis, and other oil producing nations, take the large amount of dollars they receive from oil purchases and rake them into US Treasuries (debt). Because demand for US debt has been so high, the US kept issuing it. And, because the demand for dollars is so high, the US can keep printing to pay its interest payments. When the US loses this petrodollar system, which will probably occur in the first half of the century, they won’t be able to finance such extreme deficits and the empire will end.
Next, let’s look at what has happened to income inequality after the US went off the gold standard. As I mentioned before, when new money is created, it goes directly into the banking system. After that, it goes to the most well-connected individuals and institutions.

After the fat cats have had their fill, wealth trickles down to the rest of us. The gold standard is essential in keeping money creation restrained. Now, the restraints have been lifted and the elite are flooding the system with new cash that goes directly to them, while destroying our purchasing power.
Finally, let’s look at what happened to wages once the gold standard ended. Productivity and wages used to be tightly correlated, which made a lot of sense. The more workers produce, the higher their earnings should be.

When the creation of money becomes unrestrained, inflation becomes rampant. Inflation means that your dollars don’t buy as much as they used to. That is why real wages (I.e. nominal wages minus inflation) have decoupled from productivity and gone flat since the end of the gold standard.
These important economic issues go largely undiscussed in the mainstream media. When things like wealth inequality are discussed, it’s never done intelligently or honestly. Most of the discussion is focused on a convoluted tax system or insignificant regulation. If the US wants to keep its economic powerhouse, it must focus on creating a sound monetary system.
 

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2 thoughts on “How Ending The Gold Standard Impacted The US Economy

  1. Trump will finish this country off …
    Seven skinny cows eating seven FAT cows …… is Anyone CONSERVATIVE left in America?
    This year the BANKSTERS take $276.2 billion from you as “interest” on just the National Debt. Here is the Debt Clock – http://www.usdebtclock.org/ — you can watch it real time. This is at a time of historically low rates ….. what happens when rates go up? Trump is INCREASING the debt, and thus the interest payments at a time of increasing interest rates. You pay your debts off when times are good ….. remember the 7 skinny cows eating the 7 fat cows???
    Keep digging — http://investmentwatchblog.com/credit-card-payments-and-subprime-auto-defaults-are-soaring-holiday-spending-set-to-hit-12-year-high-thanks-to-debt/
    Get some FACTS straight …. the DOW, NASDAQ, & S&P are hitting all time highs. Unemployment is supposed to be at all time LOWS. We are supposedly having a glorious upsurge in the economy, If we do not pay off the debt NOW when will we? All this glorious economic news and we still have DEFICITS?! Why do you have to “cut taxes for the already rich” so they will supposedly be inspired to create more jobs …… when everybody is supposedly employed???!! And the true job creation is proven to be by Small Business and financed by Middle Class spending, NOT by millionaires.
    “the tax cut is an exercise in willful blindness. The same no doubt could be said for the 1981 Reagan tax cuts, which predictably led to unprecedented deficits when Republicans as well as Democrats balked at making offsetting budget cuts. Yet at the time a whole band of officials in the White House and the Congress clamored, in some cases desperately, for such reductions. They accepted a realm of objective reality that existed separately from their own wishes. But in 2017, when the Congressional Budget Office and other neutral arbiters concluded that the tax cuts would not begin to pay for themselves, the White House and congressional leaders simply dismissed the forecasts as too gloomy.” http://www.zerohedge.com/news/2017-12-25/us-has-reached-last-stage-collapse
    “Alas, all you suckers out there are , like this writer, a few paychecks away from financial uncertainty. The less than one thousand dollars extra per year that this bill will throw you is nothing compared to the mega millions the super rich and the large corporations will see added to their spreadsheets. https://www.globalresearch.ca/must-be-the-season-of-the-rich/5623913
    Whilst the elite owns most of the assets, ordinary people own the debt. Not just their own debt but also the public debt burden which irresponsible governments have built up, including unfunded liabilities such as pension and medical care. And when the financial system fails, ordinary people will suffer the most.
    “USA is ‘out of whack’ with the rest of the world” ???? USA is fighting and PAYING for most of the WARS. Make those other countries pay for the wars and watch their tax rates rise. Better yet …. STOP the wars we are in. We are losing them anyway ……………
    We should be raising taxes. If these Billionaires had to pay a proportionate amount equal to the benefit they derive from Us protecting Their money, property, LIVES …….. they would take an interest in getting a GOOD government not just one that serves their immediate interests …. They would insist on ending corruption and waste and balancing the books. People whine there is no such thing as “fair” taxes ,,,,, but there is . The Workers pay with blood & money for ONE house with a mortgage to the BANKSTERS ….. counting all they pay for state, local, sales, federal taxes 1/3 of their gross. The Billionaires whine they need tax cuts “to create jobs” and NEVER SERVE in uniform so they never get PTSD, amputations, maimed or die.
    TAKE 60% of their gross because they own multiple homes with NO mortgages.
    It is past time these Billionaires & mega-corporations PAY for the wars from which they profit and which protect them. Either PAY for the wars, or we put your Boards of Directors in the Front Lines to BLEED with us working stiffs. You want to move your corporation, OUR JOBS, to another country to dodge taxes here? So WE have to pay for your wars? Over YOUR DEAD BODIES. The U.S. has intervened militarily and covertly in so many nations it is impossible to recount them all but in every case the American military is protecting some investments of value to American corporations, or a strategic position or both.
    Those who benefit the most should contribute a proportionate share.
    Amazing that all these leftwing tech billionaires do not want to share THEIR wealth. They always talk left wing “communalism” but they clutch their money like it is life itself ….Even when they “give” charity it is through THEIR trusts &foundations that THEY control and reapTAX BENEFITS FROM. Even though They are always eager to spread YOUR money around……
    Time for the 1% to contribute PROPORTIONALLY to the War Efforts. Much is expected from those to whom much is given.
    Some of our Troops give ALL, or are maimed for life,and the 1% balks at giving MONEY when they have so much?!
    Cut taxes for the “Rich” so they will invest their money in creating more jobs? By that logic giving ALL your money to the Rich would make Everyone rich. Humanity already tried that. It was called FEUDALISM, a primitive form of COMMUNISM.
    LISTEN to what these neocon PSEUDO-capitalists are saying:
    “TAKE from the POOR and GIVE to the RICH”
    “FROM each according to their ABILITY, TO each according to their NEED. The POOR have the ABILITY to be squeezed for more taxes …….. and the Rich NEED more money …… to create jobs”???????.
    This is INSANITY, this is C-O-M-M-U-N-I-S-M by a different name.
    MAKE ZUCKerberg and these other Billionaires want to flood the labor pool and drive down YOUR wages with cheap illegals & invaders ….. . As it is, YOU pay to bring in and train YOUR replacements.
    The rich “Nobles” paid NO taxes and they created LOTS of jobs for the SERFS and PEASANTS………building CASTLES and making life better for the RICH-NOBILITY. Work and Taxes was all the Serfs knew. Where do the heroic figures of Robin Hood and William Tell spring from if not resistance to this inane idea? Seing this extremist idea dragged out of the muck of history proves to me that our Nation has truly been DUMBED DOWN and Public Schools need to be upgraded and intensified.
    Quit living in Never-Never Land where Wars are not paid for. The Founding Fathers of America didn’t. The Founding Fathers were rich, but they knew it was their CIVIC DUTY to contribute. It was called LEADERSHIP. They personally “raised” entire companies of men for the war. That means THEY PAID FOR THEM. Not like today when the YELLOW-BELLIED-DRAFT-DODGING Neocan WAR PROFITEERS beat the drums for endless war, and insist that YOU pay for it, while they reap profit off Defense Stocks. It is REALITY CHECK time America. Make those who pound the War Drums, GO TO THE WAR.

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