"The Gold Standard

Lewis is masterful at revising history to fit his narrative. The entire piece is chock-a-block full of inaccuracies. Let us just take a brief look at his delusional explanation of why Nixon ended the gold standard. According to Lewis, Nixon did it because he wanted to get re-elected. Well sure, all politicians want to get re-elected. But doing away with the gold standard 2 1/2 months before the election would not have provided nearly enough time for whatever positive results such a change might produce to manifest themselves in either the economy or the consciousness of the average voter. Beside which, it was only foreigners who could convert their dollars for gold, as Americans were still prohibited from owning it....Lewis never mentioned that America had been running up large deficits year after year in their ideologically inspired war against North Viet Nam. However, the rest of the world knew it and reacted as any sensible creditor would. Led by France, they started showing up at the Fed's gold window and in very short order, they reduced America's gold reserves from nearly 30,000 tons to less than 20,000. Something had to be done quickly to prevent the remainder of the gold reserve from going on a one way voyage across the Atlantic. Nixon had 3 options. He could have chosen to slash government spending and balance the budget. But that would certainly have been unpopular with the voters and would not have stopped the outflow of gold until foreign creditors saw that America could actually produce a balanced budget. Or he could have done what FDR did and revalued the dollar. But that would have been even more unpopular. His final option was to cut the last remaining tie to gold that the dollar had. That would not play well with foreign creditors, but few in America would even notice. So then, while Nixon chose the least objectionable option domestically, he did so not because he thought this would help him get re-elected, he did so because there existed a crisis of confidence in the dollar. That and only that is what led to the gold standard being jettisoned. As stated, few Americans were even aware of what Nixon had done and if he did it to win the election as claimed by Lewis, Nixon made no effort whatsoever to tell Americans what a wonderful thing he had done on their behalf and how they would benefit as a result.

The remainder of his article is no better when it comes to telling the truth about what happened. As a historian, Lewis reminds me of the revisionist historians who deny the Holocaust ever took place. They have an agenda which the facts get in the way of. Lewis is no damn better. He strongly believes that the facts should not get in the way of a good story.

The truth of the matter is that history has shown again and again and again that it matters not a whit what is used to represent money. When those entrusted with its management decide for whatever reason to live beyond their means, the currency gets destroyed. To believe that this does not happen under a gold standard is to ignore history.