Think the Fed Destroyed the Dollar?

Presidents and Executive Orders

Executive Orders Can Be More Dangerous Than The Fed or Any Governmental Agency

Two U.S. Presidents did more to destroy the value of the dollar than the Fed ever did.

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Will China Revalue The Price of Gold?

Update: Will Trump Crash The Dollar

It’s often cited that the dollar has lost 95-98% of its value since the creation of the Federal Reserve in 1913. While Fed policies have contributed to the devaluation of the dollar over the past 100 years, two U.S. Presidents did more in single actions to debase the dollar than the Fed ever did.

The Dollar Destroyers: President Franklin Delano Roosevelt and Richard Milhous Nixon.

Stroke of the pen, law of the land, kind of cool! Paul Begala – Aide to President Clinton, on presidential executive orders

Franklin Delano Roosevelt- Executive Order 6102

Roosevelt's executive order confiscated U.S. citizens' gold and immediately there after repriced gold;

Pursuant to Roosevelt’s Executive Order 6102 U.S. citizens were required to turn in their gold to the U.S. Government

In April 1933 with a stroke of the pen, FDR issued Executive Order 6102, requiring U.S. citizens to turn in their gold coins (like the $5 and $10 gold coins pictured below), gold bullion and gold certificates to the government. At the time gold coins were circulating in the United States and gold was considered money. The dollar’s value was tied to gold rate of $20.67 an ounce. Under Roosevelt’s order the government honored the $20.67 an ounce price in exchange for its citizens gold.

After issuing executive order 6102, Roosevelt began stockpiling gold from mining companies and from foreigners. In the month following the issuance of the EO6201 Roosevelt himself, in consultation with his future secretary of the treasury Henry Morgenthau, would set the gold price nudging it ever higher.* ten dollar 1909 gold eagle coinFive dollar gold eagle1905 $10  gold eagle required to be turned in to the government pursuant to executive order 6102

Dollar Devalued 41% in 1934

In January 1934 Congress passed the Gold Reserve Act which, among other things, changed the nominal price of gold from $20.67 an ounce to $35 an ounce providing Roosevelt’s government with a tidy 69% gain on their confiscated gold and a loss of 41% in purchasing power of the dollars people received in exchange for their gold. (see chart below).

The fixed price of gold of $35 an ounce remained in place until 1971 when Nixon unilaterally took the United States off the gold standard and closed the gold window.

A year later, FDR signed Executive Order 6814 confiscating silver. Learn more here.

Richard Milhous Nixon – Executive Order 11615

On August 15, 1971 Richard Nixon signed Executive Order 11615. Pursuant to that order Nixon instituted wage and price freezes to combat inflation and imposed a 10% surcharge on imports to support American industry.

Later that evening President Nixon appeared on national television (preempting the popular “Bonanza” show) to announce that he was unilaterally ripping up the Bretton Woods Agreement of 1944 that provided that foreign central banks could redeem their dollars at the U.S. Treasury for gold. Click here for background on the Bretton Woods Agreement.

Nixon announced that he was suspending the convertibility of dollars into gold. The measure was necessary, as Nixon explained, to protect the United States against “international speculators” that were harming the American worker. In reality, Nixon closed the gold window to prevent an all out run on the United States’ gold reserves.**

In this short video you can hear Richard Nixon explain that taking the U.S. off the gold standard was good for the United States, good for the world and wouldn’t result in inflation:

Dollar Devalued 51% 1971-1972

Stocks soared the next day with the Dow Jones turning in a 33 point gain-the largest ever to date. Nixon and his Treasury Secretary John Connoly had turned a collapsing dollar in to a show a strength! The dollar, however, immediately lost ground against gold and in a few months the price of gold rose from $35 to well past $50 an ounce resulting in a 51% devaluation of the dollar. As inflation raged during the 1970’s, gold continued its ascent until 1980 when it reached an then all time high of $800 an ounce.

The dollar has suffered more harm from the devaluation actions of Presidents Lincoln, Roosevelt and Nixon

The Executive Orders of Roosevelt and Nixon resulted in dollar devaluations of 41% and 52%, respectively

The dollar has lost almost all of its purchasing power

Lost Dollar Purchasing Power Relative To Gold

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Gold charts courtesy of Nick Laird

* an interesting account of how Roosevelt and Morgenthau fixed the price of gold can be found in “New Deal or Raw Deal” by Burton Folsom, Jr. In one instance Morgenthau suggested a price rise of 19 to 22 cents per ounce. Roosevelt thought 21 cents was the appropriate amount for gold to rise because 21 “was a lucky number”.

**…in the 1960’s as it became apparent to many countries that the United States was spending far in excess of its gold reserves. Many countries, notable France and Switzerland became increasingly concerned and upped their gold redemption requests. These increased requests were rapidly depleting the United States’ gold reserves. – from “Why Saudi Arabia Matters in Helping to Keep the U.S. Dollar as the World’s Reserve Currency

Will China Revalue The Price of Gold?

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Further Reading:

How to Buy Gold

How To Buy Silver

The Importance of Gold to a Nation

Gold and Silver Price Manipulation – Suspected

Gold and Silver Manipulation – Actual

Truth in Media 100 Years of the Federal Reserve

Why Saudi Arabia Matters in Helping to Keep the Dollar as the World’s Reserve Currency

Why the End of Quantitative Easing May Be Bad For the Dollar (and good for gold and silver)

Royal Canadian Mint

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