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When colonizers invaded the Americas, they went apeshit over all the gold and the indigenous Americans were all fuckin’ why? I know it’s pretty but calm the fuck down. Four hundred years later the U.S. pegged its dollar to gold—called the Gold Standard—and when the decision was made to abandon it people went apeshit again.
--On This Day in History, Shit Went Down: March 14, 1900--
Economics is all bullshit. Everything is just a house of cards that only holds up because people say it does. Money is fake and nothing matters. I think I need another cup of coffee. Anyway, the U.S. had a de facto gold standard beginning in 1873, but they made it official on March 14, 1900, with the implementation of the Gold Standard Act.
An ounce of gold was pegged at being worth $20.67. The paper money was backed by gold, so it was considered “real” money because you could walk into a bank with your twenty bucks and some pocket change and say gimme an ounce a fuckin’ gold, yo. In the early 20th century, all the world’s major economies were on the gold standard. But then some Brit lost his mind and that was that.
The Great Depression hit in the late 1920s and people were all this fucking paper is worthless and started trading it in to the point that they were running out of gold. The head of the Bank of England was freaking out because the gold standard, as far as he was concerned, was the anchor of the global monetary system and abandoning it was unthinkable. And yet, it was proving impossible to stay on it. Faced with this dilemma of how to keep western civilization afloat, he decided to have a nervous breakdown. Continues below …
I won’t have a nervous breakdown if you give me some of that no longer gold-backed currency and become a paying subscriber. Please click the green button.
While he convalesced, his colleagues said we got no choice, ditch the gold standard. People figured if the most powerful country in the world (England, not ‘murica) could do it, so could they, and lots of other countries abandoned it too, including the U.S. in 1933, even though President Roosevelt’s advisers were telling him not to. There was panic after the decision, with resignations and people saying that’s it we’re fucked we’re going from depression to another dark ages game over man. Game over! But that’s not what happened. The move gave the U.S. government alternatives for steering the economy and it was actually a major reason for America getting out of the depression.
1933 didn’t make the gold standard dead dead. That took another few decades. As World War II came to a close there was something called the Bretton Woods system that still pegged major currencies to gold for purposes of international trade and foreign exchange. Then in 1971 President Nixon was dealing with an economic crisis and foreign governments flush with U.S. cash were using it to deplete American gold reserves and Nixon said fuck you no more international convertibility of U.S. dollars to gold.
Libertarians still love the gold standard, but the vast majority of economists agree that libertarians are stupid.
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