Skip to content

The ‘Consequences’ of the 1971 NIXON Shock!

October 9, 2013

On August 15, 1971, our then President, Richard Milhous Nixon, closed the Gold Window and set our ‘dollar’ free from physical/material reality. What emerged from this shocking decision is what we now witness on our TV and Computer screens as we watch the fiasco in Washington (debt ceiling issues and such). Prior to this decision by Nixon and his advisors (1792 – 1971), our ‘dollar’ was viewed (by most) as a physical item from nature. Holders of our dollars (foreign governments) had the option to exchange their paper currencies (pounds, francs, etc.) for our Gold Supply stored at Fort Knox.

The United States Bullion Depository, often known as Fort Knox, is a fortified vault building located adjacent to Fort KnoxKentucky, used to store a large portion of United States official gold reserves and occasionally other precious items belonging or entrusted to the federal government. Is our gold supply still located within this building?

This option provided foreigners and their Central Banks with a sense that our ‘dollar’ had substance and was tied to physical/material reality (gold). All this perception is now mostly fantasy and hype as our current ‘dollar’ is now a figment of our imagination (a mental abstraction within our ‘consciousness’). This figment of our imagination is witnessed within our computer screen as a ‘virtual’ unit of mere numbers (information). Bits and bytes produce this information and the images within our computer and TV screens ($1.00 and multiples thereof). All this information within our computer screens should really be viewed as part of our imagination (not physical reality)!

What our Central Banks do today is an operation which starts with ‘imagination’ and ‘consciousness’. Let’s think about our own Central Bank called the Fed. Does this entity which consists of a huge concrete structure in Washington D.C. contain any physical/material MONEY? Is there one unit of physical money stored within this structure? Answer is NO. So where does our Fed Chairman (and his FOMC committee) who initiated all the QE operations since 2008 ‘get’ these $trillions of ‘dollars’ to manipulate our economy? Where does ‘money’ (our dollars) come from?

Our Federal Reserve building in Washington D.C. Is there any money within this structure? 

Let’s first think about the question: where did money originally come from for most of our economic history. Are you aware that money was invented by people in the marketplace and that people chose specific physical items from nature for their money? The very first unit of money chosen by people was likely a grain(s) of barley and or similar. Some historians say that farming was the beginning of economic activity. Later in time,  items like silver nuggets were discovered and people desired this element from nature. Gradually, this nugget was converted into a minted coin and people then chose this minted coin as their unit of ‘value’ (for trading and exchange). Silver was ‘money’ for most of our recorded history.

The origin of the American dollar (the name) occurred in 1785. In 1792, our first silver dollar coin was defined and minted. Silver was our legal tender unit for most of our economic history.

Americans used silver as a basic money item for most of our history (until the last economic depression of 1929-41). Then in 1934 and after (via decisions of FDR and his advisors) the paper Federal Reserve Note became our basic unit for money transactions. FDR called in our gold coins and bullion and created new legal tender called the Federal Reserve Dollar. This dollar was mostly printed on paper until 1971-73. Then in 1973 a new currency regime emerged called the ‘floating currency regime’. This regime gradually evolved into a paperless regime which we now witness as our ‘digital dollar(s)’. Since 2008 we have witnessed the emergence of digital money for most of our money transactions (now some 96% of all monetary transactions). The virtual digital dollar is now ubiquitous.

Money transactions can now be accomplished via smart phones (digitally)!

All of my personal monetary transactions are now mostly digital and within the computer screen. My mobile smart phone allows me to trade stocks and bonds. This device also allows me to purchase goods and services directly from this mobile device. My Wells Fargo account has a concept called ‘sure pay’ and ‘bill pay’ which allows me to pay all my bills with my smart phone and send digital dollars to anyone with a registered banking account. What a change from the markets prior to 2008 and prior to 1971. The old traditional forms of currencies (paper notes, metal coins, silver coins, and gold coins) are now mostly obsolete and digital monies are the new regime (domestically and globally). I no longer ‘need’ physical/material money for my trading, investing, saving, or spending decisions.

Today, we witness the consequences of the closing of the gold window which occurred on August 15, 1971. Physical money has been replaced with ‘abstract’ units of currency. These ‘abstract’ units are now created (not by printing notes) but by ‘typing’ in abstract numbers into the computer screen. This ‘typing’ of numbers is done by banksters who have the authority to act in this manner. Money is ‘typed’ into a Central Bank computer and then digital numbers emerge within the computer screen. These digital numbers can then be called ‘dollars’ and/or ‘legal tender’. The operation called Quantitative Easing (QE) is an example of this process for money creation.

Today, money units emerge from NOTHING (which many call ‘thin air’). In reality, however, human beings in positions of Authority (say, Ben Bernanke, et al) can create new money units from their ‘imagination’. Where did Ben ‘get’ all his $trillions of QE and Loan Facility dollars (some $20 trillion and counting since the crisis of 2008)? Think about this issue! Where did Ben derive the number of $85 billion (monthly) which is currently being created for what we call ‘Asset’ purchases? Did he have a store of physical dollars within the concrete structure called the Federal Reserve Building? I don’t think so! All Ben needs to do today is send a ‘directive’ (via email or phone) to his associate (Bill Dudley) at the New York Federal Reserve Bank with instructions for Bill to ‘type’ in $85 billion into the Fed’s computer! Wa La! Money emerges like magic ‘out of nothing’! What a neat Ponzi scheme for those in the know!

article-2395884-1B54A271000005DC-698_634x569.jpg (634×569)

Central Bankers can now create digital currencies from their ‘imagination’ (also called Consciousness)!

Additional consequences of closing the gold window in 1971 are all the derivative contracts which have emerged to ‘hedge’ risk within our markets. Are you aware that most of our derivative instruments (now some $633 trillion and counting) emerged since the closing of the gold window? Why? I would suggest that hedging was absolutely necessary given our index currencies within our global markets. Values and Prices became volatile and uncertain after the closing of the gold window. As our digital (imaginary) currencies developed this volatility and uncertainty grew exponentially. Price discovery became impossible to ascertain from day-to-day and month to month. This required that hedging instruments (called derivatives) be developed for our trading markets.

In conclusion, let me emphasize some issues which we now face as consequences of the closing of the gold window in 1971:

1. All our national debt ($17 trillion and counting) is now stored as digital units within the computer screen. Go to: . The entire global debt (some 1.5 quadrillion and counting) is also within the computer screens of each individual Nation.

2. Virtual and/or Digital currencies now represent our stock of money and our debt for our planet. The actual physical paper notes and coins in circulation are gradually diminishing as the cashless world society emerges.

3. The debt ceiling issue and our entitlement issues are now mostly accounting issues…which means that all these issues are derivations from our consciousness (political issues). Math and numbers will need to be manipulated and rearranged on our accounting books so that we can ‘appear’ to be solvent as a Nation and a World.

4. To understand our debt and accounting issues you can visit this website for more evidence and understanding:

Yes, the consequences of closing the gold window are now issues for us to deal with. These issues will not be easy to resolve as our Nation and the World is addicted to the ‘opium’ of credit/debt and imaginary money. What is now needed is for everyone reading this missive to seek understanding and awareness on all these issues. For new understanding check out all the different websites which cover these issues. Have a good day! I am:

No comments yet

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: