WTF Happened Before 1971? \ stacker news ~bitcoin

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WTF Happened Before 1971?

3522 sats \ 48 comments \ @kr 31 Jan bitcoin

Most stackers are already aware of the WTF Happened in 1971 website which suggests that a wide array of societal ills can be traced back to the year the US suspended convertibility of dollars to gold.

What I’m curious about is what were the factors that got the US into such a bad position that they felt the need to suspend the dollar’s convertibility in the first place?

Can we isolate the actual events in the years and decades leading up to 1971 that led to the 1971 outcome?

Was there one big mistake America made or many small ones that compounded?

I suspect those events will tell us more about what to avoid than the actual events of August 5th 1971.

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1380 sats \ 1 reply \ @jtwoodhouse 31 Jan

Three Days at Camp David is a good book for anyone interested in this.

20 sats \ 0 replies \ @kr OP 31 Jan

looks great, thanks for the reco!

989 sats \ 18 replies \ @ch0k1 31 Jan

TLDR;

What basically happened is that the Dutch, British and French wanted almost simultaneously to buy back their gold using the dollars US had given them before which basically would cause severe inflationary problems (if not insolvency)

416 sats \ 2 replies \ @SimpleStacker 31 Jan

Is there a book or resource you'd recommend to read more on this subject?

250 sats \ 0 replies \ @ch0k1 31 Jan

Ahm, I really don't remember where exactly I had read it...

10 sats \ 0 replies \ @joda 31 Jan

It's on Wikipedia

10 sats \ 14 replies \ @kr OP 31 Jan

why did they all simultaneously want to buy back their gold from America?

did they sense some sort of weakness? if so, what was the root cause of that weakness?

613 sats \ 10 replies \ @SwearyDoctor 31 Jan

they wanted it back because they got wind of the fact that the dollar backing was a mirage, there were many more dollars in circulation as there was gild to back them, so the unbacked printing was actually much older. It was just the moment of truth. And the French didn't just "ask to buy it back" - they wanted their gold, which was said to be stored in a US vault, and the US woldn't give it t them, and de Gaulle sent a literal warship.

12 sats \ 8 replies \ @kr OP 31 Jan

de Gaulle sent a literal warship

whoa, had never heard this part of the story before

they wanted it back because they got wind of the fact that the dollar backing was a mirage

how far back do we need to look to find the root of this “mirage”? 1913?

667 sats \ 7 replies \ @SwearyDoctor 31 Jan

without going into research now, it's usually attributed to the Vietnam war, which made the givernment print and spend money to finance a losing decade-lomg war. So, when they say unbacked fiat supports wars, this is largely true, though it happened before the end of the backing - by keeping the facade up and the printer going anyway. The French saw the balances and the utflows and determined that this can't be true, and sent the ship to pick up the gold, at which point Nixon had to admit that it's not actually there to back it all.

526 sats \ 2 replies \ @ek 31 Jan

at which point Nixon had to admit that it's not actually there to back it all.

Did he really admit? I thought he just said it's a "speculative attack". It's hard to find credible sources around this event and time though.

Best part:

to suspend temporarily the convertibility of the dollar into gold

243 sats \ 0 replies \ @ch0k1 31 Jan

Nothing is more permanent than politics' temporary acts 🤣

0 sats \ 0 replies \ @SwearyDoctor 31 Jan

don't know, tbh, but there is usually a difference between admitting pubicly and admitting internally, if only because they think the public gullible fools, while other governments at least have their own intelligence and sit on more information. At least in 1971, today it might well be the other way around...

10 sats \ 2 replies \ @joda 31 Jan

The US printed unbacked fiat all the way back in the Revolutionary war

10 sats \ 1 reply \ @IanMalcolmPhd 31 Jan

That was ok to defeat the British I guess

10 sats \ 0 replies \ @joda 31 Jan

The US has quite the history of fiat:

" Continentals were not backed by any tangible asset; they were supposed to hold their value on the Continental Congress's expectation of future tax revenues, which, given that they were in the midst of a war, created more uncertainty than the new currency could withstand.1

The Revolutionaries continued printing money and ultimately issued more than $200 million in rebel currency. Within five years, continentals suffered significant depreciation and eventually were practically worthless.3 To contribute to the devaluation of the continentals, the British produced enormous quantities of counterfeit bills to sabotage the American economy. Afterward, the colonies held considerable debt from the war."

https://www.investopedia.com/terms/c/continentals.asp https://en.wikipedia.org/wiki/Early_American_currency

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10 sats \ 0 replies \ @kr OP 31 Jan

this makes a lot of sense, thanks!

0 sats \ 0 replies \ @guts 31 Jan

Man this should be taught in history class.

454 sats \ 2 replies \ @ch0k1 31 Jan

Simply because that was the deal explicitly written in the Bretton Woods contract... What does it matter and do you have to explain your motives to the other party when you want to exercise your rights on a particular contact?

I don't know the exact reasoning they had but I've read somewhere that after multiple rejections from the US to comply to the contract, they needed to sail to the US in order to show how serious their intentions were. 🤣

10 sats \ 1 reply \ @kr OP 31 Jan

ahh got it.

but surely this wasn’t the first time America was asked to give gold back to a foreign country… right?

480 sats \ 0 replies \ @ch0k1 31 Jan

Yeah, I would rephrase it like this 👇

This definitely wasn't neither the first nor the last time when the US tried to play dirty and abuse the trust and authority others had given them

685 sats \ 8 replies \ @antic 31 Jan

Turns out it’s really hard to fund a forever war with real money.

375 sats \ 0 replies \ @SwearyDoctor 31 Jan

this exactly, and it was Vietnam that exposed this first, leading to 1971

52 sats \ 6 replies \ @kr OP 31 Jan

ahhh ok, so perhaps American expenditures in Vietnam were enough to draw attention from European countries holding gold in America, with Vietnam acting as a catalyst for the collapse of an already unsustainable system?

490 sats \ 5 replies \ @ch0k1 31 Jan

Exactly 💯

Btw @kr, can I use this thread as an opportunity to ask you as one of the listed contributors in the footer 👇

Do you guys plan to develop a native mobile application for SN since it'll be really useful if we could take all the advantages it would provide mobile users such as - push notifications, better UI for easier everyday communication, pushing wider adoption and gaining more traffic because of being more accessible etc.?

10 sats \ 4 replies \ @kr OP 31 Jan

it’s been discussed before, but definitely not an immediate priority - SN already has a PWA option for mobile stackers

385 sats \ 3 replies \ @ch0k1 31 Jan

If you refer to browsers' "add to the home screen" feature - yeah that's how I'm currently using SN but native app would give much better UX on mobile and most importantly this approach of having low-level OS access will open the door for developing so many new functionalities 💭

16 sats \ 2 replies \ @ek 1 Feb

for developing so many new functionalities

For example? Push notifications and image upload work fine from the PWA.

I don't know what else we could need.

would give much better UX

It would help if you can tell how the current UX is lacking.

Dealing with official app stores and maintaining a completely different code base is not something we want to do at our size without clear benefits.

However, there are unofficial ones native app. @felipe is developing one here and there used to be Bsats which is no longer maintained

51 sats \ 0 replies \ @felipe 1 Feb

Hey @ekzyis! Thanks for reminding me that the app exists, hahah!

However, there are unofficial ones native app. @felipe is developing one

It's been a while since I last updated it so it's probably broken. Also, I removed it from the Google Play Store because people where actually using it and I didn't have the time to maintain it.

Maybe someday in the near future I try to make it work properly again and implement that new territory thing there.

49 sats \ 0 replies \ @felipe 1 Feb

Dealing with official app stores and maintaining a completely different code base is not something we want to do at our size without clear benefits

There's no need to deal with official app stores to have a native app. It's possible to distribute directly from Github, Gitlab, publish on F-droid and etc. Off course I'm talking about Android here.

Apple devices are completely different. Actyally, I don't even know how people here still use Apple devices with all the client-side scanning Apple has been doing the past years (client-side scanning = zero privacy).

480 sats \ 2 replies \ @Malachi17 31 Jan

JFK was killed, hostile elements took over the government under the claim of procedure and undermined the stability of the dollar.

0 sats \ 1 reply \ @kr OP 31 Jan

go on, i’m listening…

406 sats \ 0 replies \ @Malachi17 31 Jan

The outcome was to peg the dollar to crude oil instead of gold which benefited those who were in oil. Oil bounces around, and it is why Iran is keen on getting rid of the dollar I think this year to purchase oil.

444 sats \ 0 replies \ @kurszusz 31 Jan

Here is my article, about what I think, WHY happened :) #407898

406 sats \ 2 replies \ @kurszusz 31 Jan

Short version: the principal factor for what USA abandoned the gold standard was that gold was hard to move (harder than fiat $$$), and this make international trade impossible (limited / slowed it down).

Long version: I will write an article about this later today, and I will link here :)

0 sats \ 1 reply \ @kr OP 31 Jan

excited to read it!

21 sats \ 0 replies \ @cryptofolyo 31 Jan

https://bit.ly/dollarhyperinflation

463 sats \ 0 replies \ @OgFOMK 31 Jan

That's what the Creature From Jekyll Island covers.

363 sats \ 4 replies \ @cryptofolyo 31 Jan

Moon Landing 1969 And Nixon Shock in 1971

0 sats \ 3 replies \ @kr OP 31 Jan

why is the moon landing relevant here?

427 sats \ 2 replies \ @cryptofolyo 31 Jan

was there enough money to moon land? or just enough to pay kubrick

0 sats \ 1 reply \ @kr OP 31 Jan

oh true, i forgot about the scale of nasa’s budget in the 60s

363 sats \ 0 replies \ @cryptofolyo 31 Jan

there was no gold to repay other countries but there was enough money to go to moon

or did dollar have a value increase because it was issued by a nation who could go to moon

363 sats \ 1 reply \ @zuspotirko 31 Jan

I think the "WTF Happened in 1971?" thing is an overblown catchphrase.

Of course the end of the gold standard is a big thing with big consequences.

But it's also when or shortly before computers happened.

0 sats \ 0 replies \ @kr OP 31 Jan

good point!

31 sats \ 1 reply \ @thepeoplecentric 31 Jan

The Creature from Jekyll Island

0 sats \ 0 replies \ @RoundaboutStacker 31 Jan

This!

10 sats \ 0 replies \ @KLT 31 Jan

If you haven’t read, the Fiat Standard gets into this as well as Fiat Food from a different perspective. It’s like if you gave a friend a loan and you see they’re living WAY beyond their means for years and at some point you’re like bro, could you pay me back because it looks like you can afford to but in you’re head, you can’t imagine they actually have the money on hand.