by greenavocado | 2025-05-29 20:02:09+00:00
The claim that the dollar system worked perfectly until the Fed got greedy is pure fantasy. The post-WWII Bretton Woods system wasn't a gold standard, it was a dollar hegemony masquerading as one, a rigged game where America played banker to the world while quietly running the printing press overtime. The U.S. promised dollars convertible to gold at $35 an ounce, but only for foreign governments, while internally, the Federal Reserve and Treasury operated with the restraint of a coked-up stockbroker. This was never sustainable. By 1971, the U.S. had a mere $24 billion in gold reserves backing $140 billion in foreign-held dollars, a laughable imbalance Nixon tried to conceal with capital controls and strong-arm diplomacy. But when France, under the leadership of then-President Georges Pompidou (a former Rothschild banker who, unlike today's economists, actually understood monetary games), started demanding physical gold in exchange for its dollar reserves, the gig was up. The London Gold Pool, a desperate central bank cartel formed in 1961 to artificially suppress gold's price, collapsed by 1968, precisely because the market smelled the rot.

The idea that the Fed "matched" gold supply growth with disciplined printing is historical revisionism at its worst. Throughout the 1950s, the Fed quietly monetized Treasury debt to bankroll Cold War spending. By the 1960s, it was cranking the dollar printer into overdrive to fund Vietnam and LBJ's Great Society fantasies, policies that sent inflation to 6% by 1969, even as the Fed kept interest rates below inflation (a.k.a. financial sabotage of savers). The so-called "2% rule" was fiction; the Fed was juicing the system for political convenience long before Nixon officially torched the gold window. And let's not forget the Fed's role in the speculative Eurodollar market, where offshore dollar lending exploded without reserve requirements, an early preview of the unregulated shadow banking systems that would later implode in 2008.

The fatal flaw was baked into the Bretton Woods design from day one, a paradox economist Robert Triffin warned about in 1960: To serve as the world's reserve currency, the U.S. had to supply dollars globally, but the more dollars it printed to meet demand, the shakier confidence in its gold backing became. This wasn't an accident; it was a structural time bomb. By the late 1960s, foreign central banks were drowning in dollars they couldn't redeem without triggering a run on Fort Knox. Meanwhile, the U.S. hollowed out its own industrial base, outsourcing manufacturing to Asia and Germany while replacing real production with financialization, Wall Street alchemy turning debt into "wealth."

Fast-forward to today, and the chickens are coming home to roost with a vengeance. The dollar's purchasing power has cratered, 92% loss since 1971. The national debt has ballooned to $35 trillion, nearly triple U.S. GDP. Decades of negative real interest rates have turbocharged asset bubbles, turning housing into a speculative casino while wages stagnate. And now, thanks to Washington's rampant weaponization of dollar sanctions, the BRICS nations are actively dismantling the dollar's reserve status, with China stockpiling gold and brokering oil deals in yuan. The Fed's response? More printing, more deficits, more pretending the laws of monetary gravity don't apply.

The breakdown wasn't caused by "abuse" of the dollar system, it was the inevitable result of a system designed to be abused. Fiat currencies don't fail because people mismanage them; they fail because they enable mismanagement. Gold didn't collapse in 1971, the U.S. government simply abandoned it to avoid fiscal accountability. Now we're stuck with the consequences: a financialized husk of an economy where billionaires mint fortunes in leveraged speculation while workers get paid in depreciating digits.