Politicians are liars.
I’m sure you don’t need me to tell you this. Let’s just call it a friendly reminder.
I was reminded of this fact as I wrote an article about the anniversary of Richard Nixon slamming shut the gold window for the Tenth Amendment Center.
Yup. That anniversary was yesterday (Aug. 15). Bet you didn’t see anything about that in the mainstream media. It’s not a day in history that the mainstream fixates on too much. Because, you know, the results have been less than ideal.
If you don’t know what I’m talking about, 48-years-ago yesterday, Nixon ordered Treasury Secretary John Connally to uncouple gold from its fixed $35 price and suspended the ability of foreign banks to directly exchange dollars for gold. In effect, he severed the last tie between the dollar and the gold standard and turned it into a pure fiat currency. By fiat currency, I mean backed only by the *cough* “good name” of the US government.
In other words, backed by a bunch of lying politicians.
During a national television address, Nixon promised the action would be temporary in order to “defend the dollar against the speculators.”
There is lie number one.
Temporary. I don’t know about you, but when I hear the word “temporary,” I think a few weeks. Maybe a few months. Not 48 years! I mean, I guess theoretically it could still be “temporary.” They could reopen the gold window next week. That would make Nixon not a liar. (Queue to laugh hysterically here.) But as Milton Friedman said, “Nothing is so permanent as a temporary government program.”
That brings us to the next lie. And it was a doozie! We’re talking “pants on fire” territory.
When he announced the closing of the gold window, Nixon said, “Let me lay to rest the bugaboo of what is called devaluation,” and promised, “your dollar will be worth just as much as it is today.”
What actually happened is the value of the dollar has dropped some 80% since Nixon made that fateful decision. Meanwhile, the dollar value of gold has gone from $35 an ounce to about $1,500.
Practically speaking, this means that if you had stashed an ounce of gold along with 35 one-dollar bills under your bed in 1971, today, you could buy an expensive tailored suit with your gold. The $35 in cash wouldn’t get you a pack of fancy underwear.
Of course, Nixon knew damn well that uncoupling the dollar from gold would cause the greenback to devalue. Heck, that was the whole point. As Ryan McMaken summed up:
Nixon yearned to be free of this restraint so he could spend dollars more freely, and not have to worry about their value in gold. Nixon’s move was, in short, the final and total politicization on money itself, and, as Jim Grant notes, ‘The Ph.D. standard is … a political institution. It is the financial counterpart to the philosophy of statism.’”
On a side-note, I have to give Nixon credit for using the word “bugaboo” during a nationally televised address. I’ll give him a thumbs up for the creative vocabulary. The rest of it — not so much.
That leads us to the biggest of all. Rember when Nixon declares, “I am not a crook?”
Of course, that statement was in reference to Watergate. But as it turns out, he was a crook. We can debate whether he was a crook in regards to Watergate. But when it comes to your money – he was most definitely a crook. After all, his move on Aug. 15, 1971, helped steal 80% of your money’s value.
Thanks a lot “Tricky Dick!”
Granted, he had a lot of help. You can pin some of the blame FDR and a host of other presidents. And of course, every central banker who have ever graced the halls fo the Eccles Building gets some of the credit.
So – what have we learned here? Politicians lie. I hate to be cynical (Actually that’s not true. I’m really good at being cynical and take some pleasure in it.) …but I believe pretty much all of them. Of course, they aren’t always lying. Sometimes they do tell the truth.
It’s Horton’s rule – named for libertarian foreign policy expert Scott Horton. It’s even found its way into the Urban Dictionary. Basically, it goes like this.
Politicians can be counted on to keep all their bad promises and abandon all their good ones.”
There’s another important takeaway here. Your money is going to continue to devalue. But there is a way to hedge against it. Talk to SchiffGold precious metals specialist about it today! Call 1-888-GOLD-160.
Fun on Friday is a weekly SchiffGold feature. We dig up some of the off-the-wall and off-beat stories relating to precious metals and share them with you – with tongue firmly planted in cheek. Click here to read other posts in this series.
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