What happened in 1971?

[ZCP]

interesting

WTF Happened In 1971?

"I don't believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can't take it violently out of the hands of government, all we can do is by some sly roundabout way introduce something that they can't stop." - F.A. Hayek 1984

wtfhappenedin1971.com

w/o too much politics, thoughts?

 

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[MJ DeMarco]

@Kak -- might be a good episode.

 

[Kak]

I have my suspicions about what happened just by that date and the charts... But I'll dive into this and find out what else was going on in 1971, if anything of substance.

My interest is piqued.

 

[BizyDad]

We got off the gold standard.

That's the big one.

Lesser known (or perhaps credited) Jimmy Hoffa stepped down from running a union. (Or to put it another way, 1971 marks the beginning of the decline in influence of the labor movement.)

 

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[Kak]

We got off the gold standard.

Bingo, that was my first thought.

Where central banking really hit the NOS button. Like Paul Walker on cocaine.

 

[socaldude]

It’s pretty obvious who’s to blame.

It’s not what backs the money it’s who controls and manipulates its price/quantity.

The majority of gold today is owned by big institutions. The reason bankers loved gold was because it was easy to monopolize and manipulate. They didn’t like silver because it was more plentiful.

Back then money was created through a pen and paper as an accounting entry. Today it’s created out of a digital keystroke. The digital age was definitely a blessing because we can put an end to this government/central bank fiduciary partnership scam through our own money like crypto/blockchain.

I’ve notice that a lot of “old timer” investors who used to be skeptics of crypto are now believers. It looks like 2020 definitely exposed a lot.

 

[ZCP]

 

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[Kak]

View attachment 35933

It has been a process... It didn't just all happen at once...

In 1913 the fed was created, but they didn't have all of the powers they have today. They were however able to set rates.

FDR attacked the gold standard system in the 30's too. Made banking with it more burdensome and IMO basically was the move that made gold "not money." Creating less accountability.

Then in the 40s they had the Bretton Woods agreement where a bunch of countries all decided to fix their exchange rates to the USD instead of gold. They all held each other "accountable..."

As you can see the slippery slope is getting steeper and steeper as time goes on...

The basically scrapping of that original agreement was in 1971. So, less accountability.

Also in 71 Nixon completely severed all of the dollar's direct relationship to gold. They no longer allowed redemption for gold at a fixed value. No accountability.

So most credit Nixon with taking us off the gold standard. Credit being a funny word.

There was still the final nail in the coffin though even though the fed was already, by this time, acting in a political fashion. Probably just some final repeals and legal work in 73.

Basically, over the last century, currency has moved from something people could depend on. Something NOT controlled imperfect people with human motivations, into something that is controlled by people. People called "experts," another fake science to hold over the heads of the masses. They have been expanding the balance sheet ever since with a little detour from Paul Volker during the Carter and Reagan years. It is VERY tough for them to do things like that.

A true capitalist loves a "constant" when there is an exchange... We treat the dollar as a constant even though it isn't. That is evident with most people preferring to finance big purchases now than ever before. Why? To pay it back with less valuable money.

It all comes down to a devaluation and debasement of currency which leads to INFLATION. Inflation was a well documented problem in the 70s.

I listened to a good podcast on this process from Bob Murphy a few months ago. He is a just little dry, but a brilliant economist and a good teacher.

Bob Murphy Show - Ep. 140 The Theory and Brief History of the U.S. Gold Standard

Bob explains some of the highlights of his newly released chapter for the Mises Institute book on "Understanding Money Mechanics." He explains the operation of the classical gold standard, as well as some of the issues of U.S. bimetallism during the 1800s. Mentioned in the Episode and Other...

podcasts.google.com

All of this said, I can very easily explain inflation's relationship with the phenomenon in 71 and why 2020 is going to look like round two. I'll take to the show for that. Lol, my sponsor will like it.

 

[Kevin88660]

We got off the gold standard.

That's the big one.

Lesser known (or perhaps credited) Jimmy Hoffa stepped down from running a union. (Or to put it another way, 1971 marks the beginning of the decline in influence of the labor movement.)

Rise of the Asian Tiger Economies. Singapore, Taiwan, South Korea and Hong Kong.

 

[Deleted78083]

America has been buying things it can't afford ever since. The question is: when is it going to stop?

 

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[Kak]

America has been buying things it can't afford ever since. The question is: when is it going to stop?

Peter Schiff has a funny metaphor for this. It goes something like this...

There are 4 Asians and an American on a deserted island...

One Asian, hunts. Another Asian fishes and gathers. Another Asian cooks. The American draws the pictures of dead American presidents for the Asians who, in exchange for those pictures, let him eat.

How long before they get sick of the pictures? They are certainly coming here and buying our HARD assets with these "soft" pictures. So they might already be turning up the heat. Who can blame them?

This gets in to the fallacy of spending being the fake science "driver of the economy" vs production and true value creation. Drop a billion dollars on that island... Hell drop a thousand london bars of gold on the beach. Will it drive their economy? No.

 

[Raja]

@Kak

one of your quotes "The bigger the business is, the more you can weather the storm."

I believe It will take another 50 years or something soo radical to break American economy.


NOTE: I am from India

 

[Kak]

@Kak

one of your quotes "The bigger the business is, the more you can weather the storm."

I believe It will take another 50 years or something soo radical to break American economy.


NOTE: I am from India

Haha! I love the implication that the American government is a business. It has just been legitimized as "the power that be" by the people who serve it.

The American economy is a bubble based on a currency that is a bubble. I believe it is already broken. We have just been patching holes in the sinking ship for 100 years. When will it finally be underwater? Who knows, but the trend is in place.

Unfortunately they currently and will continue to blame capitalism and evil business people for it's descent.

 

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[Andy Black]

1971. A very important year.

I was born.

Oh, and that gold / fiat thing happened?

 

[Andy Black]

View attachment 35933

So just my birthday then.

 

[Serito]

It seems that GDP growth per F**k This Event has always been pretty consistent.

 

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[socaldude]

I’m convinced that a lot of economic data is manipulated and skewed to make it look better than it really is.

We have had massive inflation in the last 50 years and yet “inflation is low”. I’m guessing there is more than one way to calculate real vs nominal prices.

 

[Kak]

What Happened In 1971? (Part 1) Not Capitalism's Fault - Ep 127 by Kill Bigger Radio with Kyle Keegan

https://wtfhappenedin1971.com/ In 1971 the correlation between wages and production begin to deviate... Many people have seen this collection of charts and figures. It honestly shows what happened pretty well... What it doesn't explain is why! The implications of some posting this website are...

anchor.fm

This is going to be a two parter. Damn!

 

[Deleted78083]

Peter Schiff has a funny metaphor for this. It goes something like this...

There are 4 Asians and an American on a deserted island...

One Asian, hunts. Another Asian fishes and gathers. Another Asian cooks. The American draws the pictures of dead American presidents for the Asians who, in exchange for those pictures, let him eat.

How long before they get sick of the pictures? They are certainly coming here and buying our HARD assets with these "soft" pictures. So they might already be turning up the heat. Who can blame them?

This gets in to the fallacy of spending being the fake science "driver of the economy" vs production and true value creation. Drop a billion dollars on that island... Hell drop a thousand london bars of gold on the beach. Will it drive their economy? No.

Yes, because at the end of the day, money does not matter. It is about production. And once you compensante decrease of production with the money printer....bad things happen. The US have survided so far because it prints money the world needs.
What will happen when there will be too many dollars on the planet? Or what will happen when people will use another currency? No wonder the G7 announced a ruling on crypto.

(I know we said no politics but hear me out)
Ironically, Chinese democracy is a nightmare for the US. They already do better everything the US is doing - but they dont inspire trust because everyone knows the government is in every Chinese company.

This is why nobody happily deals with China.

Should China become democratic, they will offer the best the world has to offer, and the West will lose it all.

 

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[BizyDad]

View attachment 35933

FDR takes United States off gold standard | June 5, 1933 | HISTORY

The United States goes off the gold standard, a monetary system in which currency is backed by gold, when Congress enacted a joint resolution nullifying the right of creditors to demand payment in gold.

www.history.com

Nixon shock - Wikipedia

en.wikipedia.org

But also, @Andy Black was born, and America hasn't been in the black since...

 

[Stargazer]

Technology and communications finally allowed the entry of Asia into the modern global market.

In 1970 General electric started the trend for modern outsourcing manufacturing which by default means importing cheap wages.

This has now shifted to the Service Industry. India's global share in IT alone has grown in the last 20 years from 2.5% to 20%

Expect to see Indian Service Companies opening offices in the US and UK soon just like Japanese car companies opened manufacturing plants back then.

Just like Japan and South Korea are no longer our 'backroom boys' China and India wont be either for much longer.

So no reason for UK/US companies to pay much.

Dan

 

[Kid]

Gold? Nah... it was color TV!

... or COVID-Beta version.

 

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[Kid]

Also what happened in '71?


... nothing

 

[Kak]

Gold was $40 in 1971.

If someone had bought $100,000 worth of it back then... They would have bought 2500 ounces of gold.

2500 ounces of gold at today's prices... Can be traded back into dollars for... $4,625,000

The S&P was at 98... LOL that's so weird.

Same hundred grand in the S&P would have been $3,745,000 today.

People say gold only "goes up" when the dollar goes down... Ok, it did. What is the S&P's excuse then? The answer is it is supply and demand driven, not directly inverse to the dollar.

 

[Jon L]

One HUGE thing you have to be careful about when reading stuff like this is, 'what do they consider a real wage?' Last time I checked, the Bureau of Labor Statistics does not include employee benefits in what it considers a wage. So ... as health insurance rates have skyrocketed over the years, the portion of money paid by a company for an employee that the BLS considers a wage has decreased.

Any time I hear people that study this stuff for a living talk about how wages have stagnated, I know they have an agenda. They know better and they're deliberately messing with the data to make their point.

 

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[Kevin88660]

Gold was $40 in 1971.

If someone had bought $100,000 worth of it back then... They would have bought 2500 ounces of gold.

2500 ounces of gold at today's prices... Can be traded back into dollars for... $4,625,000

The S&P was at 98... LOL that's so weird.

Same hundred grand in the S&P would have been $3,745,000 today.

People say gold only "goes up" when the dollar goes down... Ok, it did. What is the S&P's excuse then? The answer is it is supply and demand driven, not directly inverse to the dollar

This is not factoring the current paper manipulation in gold to suppress its price.

Russia and China own a lot more gold than they declare to have.

 

[BizyDad]

This thread is reminiscent of the old adage...

There's three kinds of lies: lies, damned lies, and statistics.

Lies, Damned Lies and Statistics

​

 

[Raoul Duke]

Bingo, that was my first thought.

Where central banking really hit the NOS button. Like Paul Walker on cocaine.

 

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[Tom H.]

It has been a process... It didn't just all happen at once...

In 1913 the fed was created, but they didn't have all of the powers they have today. They were however able to set rates.

FDR attacked the gold standard system in the 30's too. Made banking with it more burdensome and IMO basically was the move that made gold "not money." Creating less accountability.

Then in the 40s they had the Bretton Woods agreement where a bunch of countries all decided to fix their exchange rates to the USD instead of gold. They all held each other "accountable..."

As you can see the slippery slope is getting steeper and steeper as time goes on...

The basically scrapping of that original agreement was in 1971. So, less accountability.

Also in 71 Nixon completely severed all of the dollar's direct relationship to gold. They no longer allowed redemption for gold at a fixed value. No accountability.

So most credit Nixon with taking us off the gold standard. Credit being a funny word.

There was still the final nail in the coffin though even though the fed was already, by this time, acting in a political fashion. Probably just some final repeals and legal work in 73.

Basically, over the last century, currency has moved from something people could depend on. Something NOT controlled imperfect people with human motivations, into something that is controlled by people. People called "experts," another fake science to hold over the heads of the masses. They have been expanding the balance sheet ever since with a little detour from Paul Volker during the Carter and Reagan years. It is VERY tough for them to do things like that.

A true capitalist loves a "constant" when there is an exchange... We treat the dollar as a constant even though it isn't. That is evident with most people preferring to finance big purchases now than ever before. Why? To pay it back with less valuable money.

It all comes down to a devaluation and debasement of currency which leads to INFLATION. Inflation was a well documented problem in the 70s.

I listened to a good podcast on this process from Bob Murphy a few months ago. He is a just little dry, but a brilliant economist and a good teacher.

Bob Murphy Show - Ep. 140 The Theory and Brief History of the U.S. Gold Standard

Bob explains some of the highlights of his newly released chapter for the Mises Institute book on "Understanding Money Mechanics." He explains the operation of the classical gold standard, as well as some of the issues of U.S. bimetallism during the 1800s. Mentioned in the Episode and Other...

podcasts.google.com

All of this said, I can very easily explain inflation's relationship with the phenomenon in 71 and why 2020 is going to look like round two. I'll take to the show for that. Lol, my sponsor will like it.

Just want to jump in and say Bob Murphy is the man. The P.I.G. to Capitalism put so many pieces together for me back in the day and paved the way for reading more serious economics and libertarian works. He also introduced me to whole life policies, a system that's been working great for me.

Haven't checked out the new podcast yet, but I'm excited for it. I've listened to almost every ContraKrugman, every episode Bob did on the Tom Woods show, even some episodes of the Lara Murphy Report . I also love watching Bob debate and lecture.

You can probably find a video of Bob explaining exactly what happened in 1971, in thorough technical details.

Hopefully this endorsement catches the eye of anyone here who wants to understand a lot more about economics.

Also, the Harry Browne books from the 1970's probably answer this question from a contemporary point of view, e.g. "You Can Profit From A Monetary Crisis", or whatever that title is.

 

[socaldude]

It’s also helpful to remember that any economist at the Fed or in some newspaper is very much a shill. There is a reason why economics is a notoriously divided field.