Baltic Dry Index. 3566 +63 Brent Crude 70.59
Spot Gold 1780
1971: $25,200. With the U.S. out of recession by 1971, home prices nearly returned to their pre-recession median. War protests lumbered on, and President Nixon took the U.S. off the gold standard.
What is the gold standard?
It’s a monetary system that directly links a currency’s value to that of gold. A country on the gold standard cannot increase the amount of money in circulation without also increasing its gold reserves. Because the global gold supply grows only slowly, being on the gold standard would theoretically hold government overspending and inflation in check. No country currently backs its currency with gold, but many have in the past, including the U.S.; for half a century beginning in 1879, Americans could trade in $20.67 for an ounce of gold.
---- The gold standard “forces the U.S. to live within its means,” said investment strategist Mark Luschini. “Think of it as a person with a debit card rather than a credit card. The debit card holder can only spend what he or she has in the bank.”
https://www.mentalfloss.com/article/12715/why-did-us-abandon-gold-standard
In truth, it was FDR who cut off most Americans from owning gold, and stole the gold they already owned, but he kept the dollar’s link to gold to allow other nations to redeem dollars from trade into something they could use, gold.
Of course, like all monetary systems, the gold standard had its faults, but in roughly 1,500 years of history, it was the system adopted as best for trade, after trying many other versions of “money” throughout the centuries.
Most,
popular earlier systems involved silver and copper, or a combination of both in
place of gold. China, ever a leader at
innovation, tried paper money without long-term success. People cheated and
printed up their own. Paper money also, unfortunately burned. It also generated
price inflation. It was abandoned for silver.
Below, from a self-serving Federal Reserve account of how they aided and abetted FDR in stealing American’s gold at $20.67 an ounce, before revaluing it to $35 an ounce a few months later. Cheating Americans out of $14.37 an ounce.
The United States had been on a de facto gold standard since the 1830s and de jure gold standard since 1900. In 1913 the gold standard was built into the framework of the Federal Reserve. The law required the Federal Reserve to hold gold equal to 40 percent of the value of the currency it issued (technically termed the Federal Reserve Note but colloquially called the dollar) and to convert those dollars into gold at a fixed price of $20.67 per ounce of pure gold.
----During the financial crisis of 1933 that culminated in the banking holiday in March 1933, large quantities of gold flowed out from the Federal Reserve. Some of this outflow went to individuals and firms in the United States. This domestic drain occurred because individuals and firms preferred holding metallic gold to bank deposits or paper currency. Some of the gold flowed to foreign nations. This external drain occurred because foreign investors feared a devaluation of the dollar. Together, the internal and external drains consumed the Federal Reserve’s free gold. In March 1933, when the Federal Reserve Bank of New York could no longer honor its commitment to convert currency to gold, President Franklin Roosevelt declared a national banking holiday.
---- In March 1933, the Emergency Banking Act gave the president the power to control international and domestic gold movements. It also gave the secretary of the treasury the power to compel surrender of gold coins and certificates. The administration waited before employing these powers, in hope that the situation would correct itself, but gold outflows continued.
On April 20, President Roosevelt issued a proclamation that formally suspended the gold standard. The proclamation prohibited exports of gold and prohibited the Treasury and financial institutions from converting currency and deposits into gold coins and ingots. The actions halted gold outflows.
In May 1933, the administration once again weakened links to gold. The Thomas amendment to the Agricultural Relief Act gave to the president the power to reduce the gold content of the dollar by as much as 50 percent. The president also received the power to back the dollar with silver, rather than gold, or with both silver and gold, at silver prices determined by the administration.
---- The third phase began in January 1934, with the Gold Reserve Act and a return to stability. The new stability solidified the emergency measures enacted in 1933, resurrected the gold standard, and re-established financial links between America and the rest of the world.
At the time, the Roosevelt administration’s gold policies were controversial. Critics asserted that they were “completely immoral” and “a flagrant violation of the solemn promises made in the Gold Standard Act of 1900” and promises made to purchasers of Liberty and Victory Loans during World War I (Angell 1934, 492). Critics claimed these policies set the stage for an inflation of supply of credit and currency, which would trigger a speculative boom bigger than ever before and eventually end in a disastrous depression (Bullock 1934, 44). Critics claimed that these policies delayed economic recovery by frightening and confusing consumers and businessmen.
https://www.federalreservehistory.org/essays/roosevelts-gold-program
A good politician is quite as unthinkable as an honest burglar.
H. L. Mencken.
Then came World War Two and most of Europe got wrecked, went bankrupt and/or deeply in debt to the USA. Much of Asia got wrecked and indebted too. The USA ended up with much/most of the world’s stored gold.
In 1944, with the right side winning the war, a conference was held to try to rebuild the economic damage caused by WW2. [The USSR was left out for obvious reasons.]
What Was the Bretton Woods Agreement and System?
The Bretton Woods Agreement was negotiated in July 1944 by delegates from 44 countries at the United Nations Monetary and Financial Conference held in Bretton Woods, New Hampshire. Thus, the name “Bretton Woods Agreement.1
Under the Bretton Woods System, gold was the basis for the U.S. dollar and other currencies were pegged to the U.S. dollar’s value. The Bretton Woods System effectively came to an end in the early 1970s when President Richard M. Nixon announced that the U.S. would no longer exchange gold for U.S. currency.
---- Approximately 730 delegates representing 44 countries met in Bretton Woods in July 1944 with the principal goals of creating an efficient foreign exchange system, preventing competitive devaluations of currencies, and promoting international economic growth. The Bretton Woods Agreement and System were central to these goals.
https://www.investopedia.com/terms/b/brettonwoodsagreement.asp
But US governments and politicians could resist anything except temptation and quickly abused their ability to issue fiat currency without [much] restraint.
During the 1960s the USA attempted to fight the Vietnam War and build the Great Society without raising taxes to pay for them, or devaluing the dollar in terms of gold. Other countries led by France started redeeming their fiat dollars for US gold as per Bretton Woods Agreement. They weren’t fools!
By 1970, Uncle Sam had issued far more overseas dollars than he had gold to redeem them at the official price of gold or anything close.
President Nixon [actually Arthur Burns, Paul Volker and John Connolly,] came up with a plan. If FDR could steal American’s gold, President Nixon could steal everyone else’s!
With Malice Aforethought President Nixon liked it. After conniving with his key advisors in secret at Camp David, President Nixon bombed the mostly unsuspecting free world on August 15, 1971 with fiat money, communist money.
Since the names Rouble and Yuan were already taken, President Nixon was left stuck with the old name “dollar” for his new fiat currency, but it had the added value of fooling most of the people, most of the time, that it was the same as the old dollar. It wasn’t and still isn’t.
To infinity and beyond!
President Nixon and the Fed choir, Greenspan, Bernanke, Yellen, Powell.
Nixon shock
The Nixon shock was a series of economic measures undertaken by United States President Richard Nixon in 1971, in response to increasing inflation, the most significant of which were wage and price freezes, surcharges on imports, and the unilateral cancellation of the direct international convertibility of the United States dollar to gold.[1]
While Nixon's actions did not formally abolish the existing Bretton Woods system of international financial exchange, the suspension of one of its key components effectively rendered the Bretton Woods system inoperative.[2] While Nixon publicly stated his intention to resume direct convertibility of the dollar after reforms to the Bretton Woods system had been implemented, all attempts at reform proved unsuccessful. By 1973, the Bretton Woods system was replaced de facto by the current regime based on freely floating fiat currencies.[3]
---- It was not until 1958 that the Bretton Woods system became fully operational. Countries now settled their international accounts in dollars that could be converted to gold at a fixed exchange rate of $35 per ounce, which was redeemable by the U.S. government. Thus, the United States was committed to backing every dollar overseas with gold, and other currencies were pegged to the dollar.
For the first years after World War II, the Bretton Woods system worked well. With the Marshall Plan, Japan and Europe were rebuilding from the war, and countries outside the US wanted dollars to spend on American goods—cars, steel, machinery, etc. Because the U.S. owned over half the world's official gold reserves—574 million ounces at the end of World War II—the system appeared secure.[5]
However, from 1950 to 1969, as Germany and Japan recovered, the US share of the world's economic output dropped significantly, from 35% to 27%. Furthermore, a negative balance of payments, growing public debt incurred by the Vietnam War, and monetary inflation by the Federal Reserve caused the dollar to become increasingly overvalued in the 1960s.[5]
In France, the Bretton Woods system was called "America's exorbitant privilege"[6] as it resulted in an "asymmetric financial system" where non-US citizens "see themselves supporting American living standards and subsidizing American multinationals". As American economist Barry Eichengreen summarized: "It costs only a few cents for the Bureau of Engraving and Printing to produce a $100 bill, but other countries had to pony up $100 of actual goods in order to obtain one".[6] In February 1965 President Charles de Gaulle announced his intention to exchange its U.S. dollar reserves for gold at the official exchange rate.[7
By 1966, non-US central banks held $14 billion, while the United States had only $13.2 billion in gold reserve. Of those reserves, only $3.2 billion was able to cover foreign holdings as the rest was covering domestic holdings.[8]
By 1971, the money supply had increased by 10%.[9] In May 1971, West Germany left the Bretton Woods system, unwilling to revalue the Deutsche Mark.[10] In the following three months, this move strengthened its economy. Simultaneously, the dollar dropped 7.5% against the Deutsche Mark.[10] Other nations began to demand redemption of their dollars for gold. Switzerland redeemed $50 million in July.[10] France acquired $191 million in gold.[10] On August 5, 1971, the United States Congress released a report recommending devaluation of the dollar, in an effort to protect the dollar against "foreign price-gougers".[10] On August 9, 1971, as the dollar dropped in value against European currencies, Switzerland left the Bretton Woods system.[10] The pressure began to intensify on the United States to leave Bretton Woods.
To combat these problems, President Nixon consulted Federal Reserve chairman Arthur Burns, incoming Treasury Secretary John Connally, and then Undersecretary for International Monetary Affairs and future Fed Chairman Paul Volcker.
On the afternoon of Friday, August 13, 1971, these officials along with twelve other high-ranking White House and Treasury advisors met secretly with Nixon at Camp David. There was great debate about what Nixon should do, but ultimately Nixon, relying heavily on the advice of the self-confident Connally, decided to break up Bretton Woods by announcing the following actions on August 15:[13][14][15]
- Nixon directed Treasury Secretary Connally to suspend, with certain exceptions, the convertibility of the dollar into gold or other reserve assets, ordering the gold window to be closed such that foreign governments could no longer exchange their dollars for gold.
- Nixon issued Executive Order 11615 (pursuant to the Economic Stabilization Act of 1970), imposing a 90-day freeze on wages and prices in order to counter inflation. This was the first time the U.S. government had enacted wage and price controls since World War II.
- An import surcharge of 10 percent was set to ensure that American products would not be at a disadvantage because of the expected fluctuation in exchange rates.
Speaking on television on Sunday, August 15, when American financial markets were closed, Nixon said the following:
The third indispensable element in building the new prosperity is closely related to creating new jobs and halting inflation. We must protect the position of the American dollar as a pillar of monetary stability around the world.
In the past 7 years, there has been an average of one international monetary crisis every year ...
I have directed Secretary Connally to suspend temporarily the convertibility of the dollar into gold or other reserve assets, except in amounts and conditions determined to be in the interest of monetary stability and in the best interests of the United States.
Now, what is this action—which is very technical—what does it mean for you?
Let me lay to rest the bugaboo of what is called devaluation.
If you want to buy a foreign car or take a trip abroad, market conditions may cause your dollar to buy slightly less. But if you are among the overwhelming majority of Americans who buy American-made products in America, your dollar will be worth just as much tomorrow as it is today.
The effect of this action, in other words, will be to stabilize the dollar.
https://en.wikipedia.org/wiki/Nixon_shock
If you ever injected truth into politics, you’d have no politics.
Will Rogers.
Fast forward to today and we have the world “Utopia” that fiat currency built.
Never ending wars.
The greatest financial divide in modern history.
A financialised gambling economy.
Never ending bankster bailouts.
Mountainous unrepayable debt.
Sucking resources from future generations for “prosperity” today.
Massive environmental damage globally.
Trillions upon trillions of new Magic Money Tree fiat money issued just since March 2020.
A top-down driven attempt at building an all-electric, carbon free global economy by 2050, that nobody is asking for.
Below, why a “green energy” economy may not be possible anyway, and if it is, it won’t be quick and it will be very inflationary, setting off a new long-term commodity Supercycle. Probably the largest seen so far.
The “New Energy Economy”: An Exercise in Magical Thinking
https://media4.manhattan-institute.org/sites/default/files/R-0319-MM.pdf
Mines, Minerals, and "Green" Energy: A Reality Check
https://www.manhattan-institute.org/mines-minerals-and-green-energy-reality-check
by Tyler Durden Monday, Aug 02, 2021 - 08:40 PM
Covid-19 Corner
This section will continue until it becomes unneeded.
Epidemiologist agrees with Fauci, says everybody will someday ‘likely’ need a booster shot of the Covid vaccines
Epidemiologist Dr. Anne Rimoin told CNBC that she agrees with White House chief medical advisor Dr. Anthony Fauci when he said that everybody will someday “likely” need a booster shot of the Covid-19 vaccines.
“Well, I think Dr. Fauci is right,” said Rimoin, a professor of epidemiology at the UCLA School of Public Health.
“What’s going to warrant a booster shot is, when we see real, waning effectiveness of this vaccine from keeping people from severe disease and from hospitalization or death. We’re not there yet, but when we are, that’s when we’re going to need a booster.”
The Centers for Disease Control and Prevention gave final approval Friday to start administering Covid-19 booster shots to Pfizer and Moderna vaccine recipients hours after a key panel unanimously voted to endorse third doses for immunocompromised Americans. The CDC’s decision followed the Food and Drug Administration’s approval late Thursday of the booster shots for immunocompromised patients.
Rimoin told CNBC’s “The News with Shepard Smith” that both agencies made a “really important” decision when it comes to the immunocompromised population.
----Immunocompromised patients make up roughly 2.7% of the U.S. adult population and 44% of hospitalized breakthrough infections, where someone gets infected even after they’ve been fully vaccinated.
Olympics now ended, Japan races to vaccinate as virus surges
TOKYO (AP) — The Tokyo Olympics have ended, but it’s still vacation season in Japan, and many people are ignoring government pleas to avoid travel and stay away from bars and restaurants even as the coronavirus spikes at record levels.
Prime Minister Yoshihide Suga is pinning his hopes on vaccinations, which started slow but now are making good progress. How this race between shots and disease finishes may determine Suga’s political future, not to mention the health of tens of thousands.
Suga seems optimistic vaccines will win, but with only about 36% of the population fully vaccinated, experts say the virus’s highly infectious delta variant is pulling ahead. They are urging the government to put more teeth in its weak state of emergency. Japan has managed the COVID-19 pandemic better than many countries, without the kind of restrictive lockdown used in other nations, but some believe that may now be needed.
Japan’s daily coronavirus cases have topped 10,000 for more than a week, and the total has doubled in the past four months to exceed 1 million. Tokyo’s daily caseloads tripled during the Games that ended Sunday. And as hospitals fill up, nearly 18,000 infected people are isolating at home, over 10 times more than a month ago.
---- Serious cases are now mostly among people in their 50s or younger, who are still largely unvaccinated. So far, 14 million — less than 20% of those aged 12 to 64 who are eligible for shots — have been fully vaccinated, according to Taro Kono, the minister in charge of vaccinations.
More
More US cities requiring proof of vaccination to go places
Hold on to that vaccination card. A rapidly growing number of places across the U.S. are requiring people to show proof they have been inoculated against COVID-19 to teach school, work at a hospital, see a concert or eat inside a restaurant.
Following New York City’s lead, New Orleans and San Francisco will impose such rules at many businesses starting next week, while Los Angeles is looking into the idea.
The new measures are an attempt to stem the rising tide of COVID-19 cases that has pushed hospitals to the breaking point, including in the Dallas area, where top officials warned they are running out of beds in their pediatric intensive care units.
Dallas County Judge Clay Jenkins said the situation is so dire that if a parent is seeking care for a sick or injured child, “your child will wait for another child to die. Your child will just not get on a ventilator. Your child will be care-flighted to Temple or Oklahoma City or wherever we can find them a bed, but they won’t be getting one here unless one clears.”
----On Friday, the Chicago school system, the nation’s third-largest district, with more than 360,000 students, announced it will require all its teachers and other employees to be fully vaccinated by mid-October unless they qualify for a medical or religious exemption.
Philadelphia has decreed that health care workers and college students and staff members must get their shots by mid-October.
New Orleans Mayor LaToya Cantrell called proof of vaccination the best way to protect businesses. She said she is not imposing capacity limits or contemplating a shutdown similar to the one that devastated businesses in 2020.
“Unlike this time last year, we have a tool that we did not have,” she said, referring to vaccines.
Over the past two weeks, Louisiana has set daily records for the number of people hospitalized with COVID-19, reaching 2,907 patients on Friday. Ninety-one percent of those hospitalized are unvaccinated, according to state data.
More
Next, some very useful vaccine links kindly sent along from a LIR reader in Canada. The links come from a most informative update from Stanford Hospital in California.
World Health Organization - Landscape of COVID-19 candidate vaccines. https://www.who.int/publications/m/item/draft-landscape-of-covid-19-candidate-vaccines
NY Times Coronavirus Vaccine Tracker. https://www.nytimes.com/interactive/2020/science/coronavirus-vaccine-tracker.html
Stanford Website. https://racetoacure.stanford.edu/clinical-trials/132
FDA information. https://www.fda.gov/media/139638/download
Regulatory Focus COVID-19 vaccine tracker. https://www.raps.org/news-and-articles/news-articles/2020/3/covid-19-vaccine-tracker
Some more useful Covid links.
Johns Hopkins Coronavirus resource centre
https://coronavirus.jhu.edu/map.html
Rt Covid-19
The Spectator Covid-19 data tracker (UK)
https://data.spectator.co.uk/city/national
This weekend’s musical diversion. Another almost unheard great composer! A great female composer at that. I would like to hear it transitioned for the louder piano. Approx. 13 minutes. Check out her older sister too.
Maria Teresa Agnesi (1720-1795) - Concerto per il cembalo
https://www.youtube.com/watch?v=EWbvFDhZ2xI
Maria Teresa Agnesi Pinottini
Maria Teresa Agnesi (Italian pronunciation: [maˈriːa teˈrɛːza aɲˈɲɛːzi, -ɲeːz-]; October 17, 1720 – January 19, 1795) was an Italian composer. Though she was most famous for her compositions, she was also an accomplished harpsichordist and singer, and the majority of her surviving compositions were written for keyboard, the voice, or both.
Maria Teresa was born in Milan to Pietro Agnesi, an overbearing man in the lesser nobility. He provided early education for both Maria Teresa and her more famous older sister, Maria Gaetana, a mathematics and language prodigy who lectured and debated all over Europe while her sister performed. Maria Teresa was married to Pier Antonio Pinottini on June 13, 1752, and they settled in a district populated by intellects and artists, but eventually suffered severe financial ruin. Pinottini died not too long afterwards.
Maria Teresa died in Milan in 1795.
More.
https://en.wikipedia.org/wiki/Maria_Teresa_Agnesi_Pinottini
This weekend’s maths updates. Approx, 8 minutes, 13 minutes and 5 minutes.
The Uncracked Problem with 33 – Numberphile
https://www.youtube.com/watch?v=wymmCdLdPvM
42 is the new 33 – Numberphile
https://www.youtube.com/watch?v=ASoz_NuIvP0
The Mystery of 42 is Solved – Numberphile
https://www.youtube.com/watch?v=zyG8Vlw5aAw
Sorry chess fans, normal service next Saturday.
I don't make jokes. I just watch the government and report the facts.
Will Rogers.
No comments:
Post a Comment