One the most important things about gold as a monetary foundation is that it forces financiers and economists to deal with reality. Gold is the North Star by which economies and currencies are judged. It’s been this way for millennia, and it likely will remain the case for many years to come. But we have detached our money from gold, and reality. In 1971 Richard Nixon severed the last ties the dollar had to gold. Unsurprisingly the great divergence in the West between the middle class and the very rich really began pretty much right after this sever. With a truly fiat currency, a confidence scheme, the economy became much more financialized. Banking of various sorts grew and grew with nothing to tie the money down. Those who were in on the banking economy did well. Those left in the real economy did less well. This trend continues.
In an article on Friday criticizing Jeb Bush for not condemning the gold standard harshly enough (Bush only offered a timid “I don’t think so” when asked whether the US should make such a move), O’Brien highlighted some surprisingly sound comments Dr. Carson made earlier this week during an interview with NPR. While discussing the nation’s current debt, Carson said:
“[T]he only reason that we can sustain that kind of debt is because of our artificial ability to print money, to create what we think is wealth, but it is not wealth, because it’s based upon our faith and credit. You know, we decoupled it from the domestic gold standard in 1933, and from the international gold standard in 1971, and since that time, it’s not based on anything. Why would we be continuing to do that?”
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