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View Diary: Insolvency, tax cuts, military spending and social security (188 comments)

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  •  I think we were still on the gold standard (0+ / 0-)

    when SS was enacted.

    •  Sorta, but not really (0+ / 0-)

      Sorta, kinda, but not really. In some crazy meaningless legalistic sense we still are on the gold standard. The big change was really FDR going off the gold standard, even bigger than 1971, and only partially, formally countered by Bretton Woods.

      The Bretton Woods era, til some time in the 60s (starting maybe late 50s) was comparable to the most ancient money - Silver in Mesopotamia. A quantity of silver just represented a quantity of Mesopotamian money. A quantity of gold - - most of the world's gold was owned by the US government, but forbidden to private US citizens - - just represented a quantity of dollars, by US government fiat.

      An ounce of gold was just a weird $35 dollar bill, used only for intergovernmental transactions, for all intents and purposes. The other Bretton Woods countries were just like backwater villages, tributaries to the Great King Uncle Sam, who had their own local currency (like Ithaca dollars) for local use, but settled internationally/villagely with dollars, sometimes using the weird $35 dollar bills.  Nixon just stopped the policy of printing the $35 bills, because they cost too much to make, just like changing the metal content of the penny.

      Look to the deficits - the USA ran the giantest deficits ever during the war. Vastly increased the supply of US dollar NFA. Of course didn't increase the gold supply. But the value of the dollar was supremely strong, uninflated for such a huge war. Obviously no gold constraint operated.

      In 1946 it was damn clear to all that the Dollar was Almighty & the only use of Gold was that you could get Dollars for it, and not vice versa. Took generations of "economists" to fill peoples heads up with everything-backwards sh*t after that.

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