IVIV (8): Nixonizing U.S. Currency

[Joseph Tracy]

	From: 	  brook7 at sover.net
	Subject: 	Re: IVIV (8): Nixonizing U.S. Currency
	Date: 	October 1, 2009 9:50:32 AM EDT
	To: 	  pynchon-l at waste.org
    resending since it didn't show up in my e-mail

I took the Nixon Bucks in a different way , as a kind of anti- 
socialist totalitarianism. Instead of Mao/Stalin's face everywhere it  
was the Nixonian dollar's face everywhere. Not that I believe in the  
gold standard( I think we should go on the fresh local food and free  
dancing to great music standard), but besides being a stabilizing  
protectionist measure and following the lead of switzerland and  
Germany away from Bretton woods, this was also the key to  
establishing the Dollar as the international reserve currency. I mean  
I don't get this stuff all that well and wouldn't mind a diversion  
into the topic but the reason for the action was that the US was, for  
the first time after the war, running a trade deficit. Competition  
was favoring countries without a global military presence and a war  
going in Vietnam. I have been trying to read an economist named Henry  
Liu from time to time for a non--shrill different-from-mainstream  
perspective. Here is what he has to say about "Nixon Bucks".
	
"There is an economics-textbook myth that foreign-exchange rates are  
determined by supply and demand based on market fundamentals.  
Economics tends to dismiss socio-political factors that shape market  
fundamentals that affect supply and demand.

The current international finance architecture is based on the US  
dollar as the dominant reserve currency, which now accounts for 68  
percent of global currency reserves, up from 51 percent a decade ago.  
Yet in 2000, the US share of global exports (US$781.1 billon out of a  
world total of $6.2 trillion) was only 12.3 percent and its share of  
global imports ($1.257 trillion out of a world total of $6.65  
trillion) was 18.9 percent. World merchandise exports per capita  
amounted to $1,094 in 2000, while 30 percent of the world's  
population lived on less than $1 a day, about one-third of per capita  
export value.

Ever since 1971, when US president Richard Nixon took the dollar off  
the gold standard (at $35 per ounce) that had been agreed to at the  
Bretton Woods Conference at the end of World War II, the dollar has  
been a global monetary instrument that the United States, and only  
the United States, can produce by fiat. The dollar, now a fiat  
currency, is at a 16-year trade-weighted high despite record US  
current-account deficits and the status of the US as the leading  
debtor nation. The US national debt as of April 4 was $6.021 trillion  
against a gross domestic product (GDP) of $9 trillion.

World trade is now a game in which the US produces dollars and the  
rest of the world produces things that dollars can buy."     read  
more at http://www.henryckliu.com./page2.html

Chapter 8 is very intense, combining high comedy and serious shit.   
If Nixon was working for the same conglomerate of oil, banking,  
mining, agribiz interests that run things now it isn't hard to see a  
long term plan cooked up where the elite meet to eat of engaging and  
then colonizing China as capitalism's future source of cheap labor.   
But one thing must never change. Dread and fear of the fiendish  
oriental mind and  the military might to drain our tax dollars away  
from empowering citizens, and toward eternal vigilance, hence the  
threatening Chinese voices in the middle of the night, along with the  
not so subtle sommoning of threatening and unscrupulous   
international ( read Jewish) bankers in the Nixon speech.



On Sep 30, 2009, at 10:57 AM, kelber at mindspring.com wrote:


> I haven't found any good retrospective analyses of it.   How much  
> impact did it have?  Was it another power-play for the super-rich?   
> How many super-rich were there back then?  It seems to pale (as  
> does most everything Nixon did) in light of the excesses of Reagan  
> and Dubya.
>
> Laura
>
>
>> Thanks!
>>
>>
>>> I remember watching this on TV with my staunchly-communist  
>>> grandfather.  I asked him what it all meant and he replied in his  
>>> thick Yiddish accent:  "I don't know.  But if Nixon's doing it,  
>>> it's bad."
>>>
>>> Can anyone tell me if he was right?
>>>
>>
>> Yes! and yes!
>>
>
>  Richard Fiero said
>


> Goldbugs that inhabit the WSJ editorial pages and neoclassical econ  
> types
> have agonized over the '71 shock ever since.
>

Michael Bailey said
FDR took the gold out of money for citizens, right?  He let us keep
our wedding rings and dental work though.

Bretton Woods said if you are a government you can redeem dollars for
gold at a fixed price.

Now over the course of time if the money supply inflates, the value of
gold will rise. (Let's not even get into why the money supply
inflates, it just does.  And let's not consider the fact that the
*gold supply* could in fact fluctuate, and does, which ought to
matter, shouldn't it?)

If you try to hold the line on a given price for gold, you will go
broke!  and the people you sell to will profit at your expense!

Nixon could have set a new price for gold, or let it float against
some standard, but he just said, hey we quit.

Which really, why should the US government be in the gold business  
anyway?