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The US Dollar is celebrating its Golden Anniversary of gold independence
On August 15, 2021, the US dollar will be celebrating its 50th year of independence from the gold standard. Let’s take a deeper dive into how this has impacted the US and the rest of the world.
I wasn’t alive in 1971 so I can’t recollect what it was like to have dollars backed by something other than the faith and trust in our government. Unfortunately, it feels like faith and trust in the government are heading in the wrong direction.
By closing the gold window, President Nixon made the decision that the US dollars could no longer be converted into gold. From that date forward, there were no limits on how many fiat dollars could be created. Thus far, America has benefitted from this decision. By being the world reserve currency, the US has the money printer for the world. The US has the ability to create wealth at the push of a button. The flip side is that US debt levels are now at $28.5 trillion, or about $85K per US citizen (per USdebtclock.org). Will the deficit ever be paid down? I doubt it. It’s hard for a politician to raise taxes and have a long career. And while few can project how the global monetary system will transform over the next few decades, there are alternatives burgeoning from central bank digital currencies (see China) and decentralized crypto assets.
