by Richard Martin
What can you get for your money, for instance an ounce of gold? That’s the question. You have to look at the long-term trend. Look at the second graph. Which is most volatile, oil priced in USD, or in gold?
I’ve marked up the third graph. Circle A represents the Civil War inflation and the creation of the greenback. Circle B shows the government confiscation of gold by Roosevelt. That gold was never returned and the government added insult to injury by devaluing the dollar right after. Private ownership of gold was banned in the US until the 70s.
The US has been on a de facto fiat standard since then internally and on a gold exchange standard internationally until 1971. The whole world has been on a fiat dollar standard since then backed by the “full faith and credit” of the US.
The really interesting part though is the long-term downward trend in commodities priced in gold, with shorter-term movements around a declining average. Has this downward price trend been catastrophic?
Of couse not. That’s why Bitcoin is so important. We can reclaim the hardness of gold, while overcoming its weaknesses.
Source: Ammous, Saifedean, The Bitcoin Standard
