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Originally Posted by Shady Bill
How was this allowed to happen in the US?
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How was it allowed to happen to end the gold standard that bound the value of the paper dollar to the gold the US owned? Simple answer: Vietnam. The costs of the war had ruined the state finances, more liquidity and buying power for war stuff was needed than the US had dollars and its economy could produce in profits. Not if dolalrs were emant to mean a real material value - like it was when the dollar was still bound to the amount of gold the Fed Reserve held. - Well, a bit simplified, I know, but lets keep it simple, for the purpose of this brief post.
Its alsways the same story. People still believing centran banks are "independent", are fooling themselves. The reason central banls were founded and allowed by politicians is to repalce real money with fraudulent currency schemes and ponzi schemes! In this meaning they were never independent form politicss, but fulfill the order politics has given them. Today, the ECB in Europe executes this exemplarily. The first centrla bank of the world, the Bank of England, in the end was founded by private entrepreneurs in the wake of the crashing state finances in England due to the wars against Napoleon. They founded a lending organisation that lended private money from business to the crown, in the following thirty years or so the crown gave it more and more priviliges until it ended up with pretty much that power the Bank of England, which it was later renamed as, today holds.
Centrals banks showed up because politicians had run their states bancrupt. That simple it is.
I recommend you one book, which is easy to read, not long, and includes the basics. I consider it to be a classic on the topic and one of the best books on money ever written. Easy to read, and short. The download is FREE, and LEGAL !
https://cdn.mises.org/What%20Has%20G...%20Money_3.pdf
The first who had a paper money system actually were - the Chinese, in the 12th century. There was a kingdom that was at war and had a rat-tail of social issues and wanted to also help replacing the copper coin currency they had being replaced wiht something more pragmatic in everyday use. To cut history short, not even 30 years later, the economy was completely busted and had crashed, civil war was raging and the fire had spread across the borders into one or two other kingdoms as well. The new money had completely obliterated the social order and the economic system of that place, of that time. The Chinese abandoned paper money and did not touch it again until modern time.