seekingalpha | Technically the U.S. left the gold standard in 1971, but in reality
we abandoned it in 1913 with the creation of the Fed. The two publicly
visible gold-standard slippages of the past century (FDR's repricing and
Nixon's cancellation) were merely necessary adjustments following
decades of gradually increasing gold-price inconsistency caused by
continuous inflation. Given this, it seems hard to imagine that the Fed
was created for any purpose other to create this inflation, i.e. to
effectively raise our taxes under the table.
This has enormous implications for today's long-term investor. Our most constant and
predictable financial reality is the continued inflationary policy of
the Fed. Given this, and assuming the U.S. is unlikely to pull another
rabbit out of the global hat as Nixon and Ford did with the petrodollar
in the early 70s, the dollar will almost certainly continue losing
purchasing power indefinitely, in terms of both commodities and other
currencies. And when the oil-producing nations finally agree to accept
payment in currencies other than the dollar, expect a precipitous drop.
Invest accordingly.
