Chapter 13
My Final Word on Gold
As I put this book to bed, I have a little house cleaning to do. There are several recent issues that have been raised, given the renewed interest in gold. The first is a call for a return to the fixed exchange system of Bretton Woods.
On Bretton Woods II
There has been talk of returning to a Bretton Woods–type monetary system. Some call it returning to the gold standard. If you understood anything from this book you understand that Bretton Woods was about as far from a gold standard as you can get. It failed miserably because of it. Any attempt to return to it will fail again.
The gold standard was abandoned in 1913 when the Federal Reserve System was created to replace it. That is when we went off gold, not 1971. 1913 was the beginning of our present day fiat system. The gold standard as we knew it was dead but not buried. That occurred when gold was made illegal and confiscated in 1933. In 1944, when the nations of the world convened to establish the Bretton Woods system, Americans were still legally prohibited from owning gold. You cannot have a gold standard while prohibiting the use of gold as money! Bretton Woods was a system where governments could convert their surplus dollars into gold but Americans could not. A return to this kind of a system is not returning to the gold standard.
Worse, it established rules that allowed our competitors to devalue their currencies against the dollar up to 10 percent, if they ran chronic surpluses. Since ...
