was the seizure of gold coins in 1933 unnecessary?
secondrepublic
Posts: 2,619 ✭✭✭
Regarding the history of the 1933 double eagles, I've heard many people make arguments that "The removal of gold bullion from the general public was a question of National Security in preserving the shattered remains of what was left of our economy after the Great Depression." Alison Frankel's book also makes this claim (calling the redemption of gold "patriotic"), without providing any explanation whatsoever. I'd like to examine this unexamined assumption.
Why, exactly, did the government need to confiscate privately-held gold coins? The government already had enormous gold reserves, and after 1933 it ended the redemption of paper for gold by private citizens. The government could print all the paper money it wanted to prevent deflation and increase the money supply. The goverment also had at its disposal the full set of fiscal stimulus measures used in the New Deal to improve the economy. Foreign governments could still theoretically redeem dollars for gold, but if additional gold was necessary for redemption purposes the government could presumably just buy it on the marketplace (or cancel the redemption - as Nixon did in the early 1970s).
At the end of the day, what exactly was the compelling reason for the government's decision to turn the owners of private gold "bullion" into criminals and to seize most of the nation's gold supply? Am I wrong to view this as just another example of government overreaching and depriving citizens of their rights on the flimsiest of pretexts?
Why, exactly, did the government need to confiscate privately-held gold coins? The government already had enormous gold reserves, and after 1933 it ended the redemption of paper for gold by private citizens. The government could print all the paper money it wanted to prevent deflation and increase the money supply. The goverment also had at its disposal the full set of fiscal stimulus measures used in the New Deal to improve the economy. Foreign governments could still theoretically redeem dollars for gold, but if additional gold was necessary for redemption purposes the government could presumably just buy it on the marketplace (or cancel the redemption - as Nixon did in the early 1970s).
At the end of the day, what exactly was the compelling reason for the government's decision to turn the owners of private gold "bullion" into criminals and to seize most of the nation's gold supply? Am I wrong to view this as just another example of government overreaching and depriving citizens of their rights on the flimsiest of pretexts?
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
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Comments
I hate FDR for all the damage he did to this country.....
<< <i>The seizing is annoying, but it is the melting of the coins that really ticks me off.....
I hate FDR for all the damage he did to this country..... >>
While I don't necessarily like the enduring nature of some of his policies, I will say this: at least we're not speaking German or Japanese today.
Proud recipient of two "You Suck" awards
2) The gold was then collected in order to eventually steal actual real wealth from the American people and to replace it with fiat wealth called cash.
3) The Federal Reserve then got America into debt to the Federal Reserve (FR) by charging it interest to print money (money that the American people could print debt free if no Fed Reserve was around.)
4) The FR then held all the gold collected in Fort Knox as payment for this unnecessary debt. There is probably no gold in Fort Knox. The gold in Fort Knox (at least since the 70's I believe) and the Federal Reserve have never been audited.
A private bank stole all of the gold from the American people and replaced it with inflation and fiat money. This is what happens when you put private interest in charge of "free" people.
Giving up gold for "National Security" is the same as giving up your Constitutional rights for "National Security"... which is currently happening right now under this so called "Patriot Acts I & II".
Watch America Freedom to Fascism and learn what the Fed is really all about.
Rob
Hoard the keys.
<< <i>Look at what I found.
Hahaha!!!!! Give your gold to the very people that caused the PROBLEM in the first place!!!
Create a great depression and then steal from them when they are weak in the name of "national security". How is the nation more secure by this? It's about replacing real wealth with debt and inflation.
It's beyond theft, it's treason and people should hang for what they've done.
Thanks for this picture! It's priceless...
Rob
<< <i>Regarding the history of the 1933 double eagles, I've heard many people make arguments that "The removal of gold bullion from the general public was a question of National Security in preserving the shattered remains of what was left of our economy after the Great Depression." Alison Frankel's book also makes this claim (calling the redemption of gold "patriotic"), without providing any explanation whatsoever. I'd like to examine this unexamined assumption. >>
On the contrary, this is a very thoroughly examined assumption, and one of the most controversial decisions of FDR's career. Depending on your economic bent, it might be your #1 reason not to like FDR. I'm more ticked at the broader suspension of civil rights and internment of U.S. Citizens than the gold issue alone, but I hardly count it as the man's shining moment.
Many of the most influential presidents are controversial figures. Love him or hate him, FDR cast a long shadow.
What you propose is an interesting discussion, but it's not a new topic.
Hide your gold and guns people. Its coming..
<< <i>It's beyond theft, it's treason and people should hang for what they've done. >>
Yeah! Lets dig em up and hang em all! By golly, that'll show em!
The name is LEE!
<< <i>1) The private for profit bank called the "Federal" Reserve caused the Great Depression of the 30's - as proven by a Nobel Laureate in Economics.
2) The gold was then collected in order to eventually steal actual real wealth from the American people and to replace it with fiat wealth called cash.
3) The Federal Reserve then got America into debt to the Federal Reserve (FR) by charging it interest to print money (money that the American people could print debt free if no Fed Reserve was around.)
4) The FR then held all the gold collected in Fort Knox as payment for this unnecessary debt. There is probably no gold in Fort Knox. The gold in Fort Knox (at least since the 70's I believe) and the Federal Reserve have never been audited.
A private bank stole all of the gold from the American people and replaced it with inflation and fiat money. This is what happens when you put private interest in charge of "free" people.
Giving up gold for "National Security" is the same as giving up your Constitutional rights for "National Security"... which is currently happening right now under this so called "Patriot Acts I & II".
Watch America Freedom to Fascism and learn what the Fed is really all about.
Rob >>
worth repeating!
I don't want to get into the whole war war 1 and 2 thing, but needless to say these two wars shouldn't have happened, and hitler shouldn't have had reason to ever get into power as WW1 was just as much of a ruse as the reasoning we got into WW2 and wilson is as much to blame as FDR not just for getting us into WW1, but allowing the federal reserve system to be established at all.. they're both scum. Another good video to watch is the "money masters"
LINK
LINK2
<< <i>
<< <i>Look at what I found.
Hahaha!!!!! Give your gold to the very people that caused the PROBLEM in the first place!!!
Create a great depression and then steal from them when they are weak in the name of "national security". How is the nation more secure by this? It's about replacing real wealth with debt and inflation.
It's beyond theft, it's treason and people should hang for what they've done.
Thanks for this picture! It's priceless...
Rob >>
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
The story for why the government "needed" the hold just doesn't make any sense. It had nothing to do with aiding the nation's economic recovery. It was just a bunch of power-hungry bureaucrats running roughshod over people's right to private property. (Unfortunately, that wasn't the last time the government took advantage of a national crisis to grab power. Little known is that the Patriot Act is actually a laundry list of powers the executive branch had been seeking for many years but could never get from Congress - until a disaster struck, and they pushed it through under the (literal) guise of "patriotism").
<< <i>Why, exactly, did the government need to confiscate privately-held gold coins? The government already had enormous gold reserves >>
Did they? I don't know any figures. Do you have figures on the size of the unallocated reserves before and after the gold recall act?
<< <i>The government could print all the paper money it wanted to prevent deflation and increase the money supply >>
But only if the had the gold required for the backing of that paper money. True the public could not redeem it, but the laws still required the paper to be backed, and foreign governments could still redeem the paper for gold.
The confiscation of the gold increased the government stock which they could then issue paper against, and the revaluation to $35 dollars per oz allowed them to again almost double the amount of paper that could be issued. Then later the backing requirement was reduced from the full face value to just 25 cents in gold which allowed the currency supply to be quadrupled again. So the confiscation of the gold allowed for an eight fold increase of the currency supply compared to the 1932 value of the gold. Some 220 million oz of gold had been coined in the US up to that point or 4.4 Billion dollars at $20 per oz. If they could get that they could increase paper by 4.4 billion. After the revaluation it jumps to 7.7 billion and after the backing reduction 30.8 billion. And that is in 1933 dollars. A significant chunk of change for the government to use on their "economic stimulus" spending. (Even if it didn't work.)
<< <i>
<< <i>It's beyond theft, it's treason and people should hang for what they've done. >>
Yeah! Lets dig em up and hang em all! By golly, that'll show em! >>
This is not something that happened 100 years ago and the criminals are all dead. They passed it down to their heirs and it is still going on. It's a criminal enterprise that is still going on now. The mob has nothing on these guys & gals.
Ever hear of the Rockefeller or the Rothchilds? They are deep into this and they are still alive fleecing us all.
I won't go into all of it here but if you get any idea of who really is in control of the US government and drives their agenda, you realize it is not the people of America.
Every April 15th, we all pay protection money to the real bosses.
Rob
<< <i>Rob, I spent 1 1/2 hrs watching that video Freedom to Facism and it is scary what is happening to my country. I really hope we as a people wake up before its too late.
Hide your gold and guns people. Its coming.. >>
If people would just quit focusing on Britney's new bald head and instead require anyone that goes into office to vow to abolish the Federal Reserve System, we would go a long way in stopping things from getting worse.
Let the US gov print and make money interest free! Bring back some sort of gold and silver standard to our money! Stop the insane inflation that the dollar has undergone!
Till then, stockpile gold & silver so when the dollar crashes - you'll have some real wealth But of course, the gov now wants to track gold transactions. Maybe another gold grab of the American people will be coming soon? I wouldn't be surprised.
I heard that the FR has stop telling the people just how much money they print every year! They use to tell us but since they are going exponential in their printing of cash, they don't want to panic people and just refuse to say how much money is printed. People worldwide are turning to the Euro as the new world standard.
Rob
The government chose the level at which decided to revalue. They happened to choose $35 to the ounce. They could have revalued based on the existing gold they already had sitting in reserve without the need to confiscate additional gold. So for example if they had 100 million ounces already in reserve they could have revalued at $70 to the ounce, versus $35 to the ounce at 200 million ounces (after confiscation). There was no need to confiscate gold to increase the money supply.
<< <i>Milton Friedman and Anna Schwartz provided a thorough explanation for how the actual cause of the Great Depression was the Federal Reserve's severe reduction in the money supply. Obviously, this was not the only factor, but it appears to have been a much more signficant factor than the usual story that the 1929 stock market crash is what really caused the Great Depression. And so the government's response was -- instead of increasing the money supply -- was to make ownership of gold illegal (on penalty of 10 years in prison), so that - what - the government could keep all the gold in Fort Knox where it sits and collects dust?
The story for why the government "needed" the hold just doesn't make any sense. It had nothing to do with aiding the nation's economic recovery. It was just a bunch of power-hungry bureaucrats running roughshod over people's right to private property. (Unfortunately, that wasn't the last time the government took advantage of a national crisis to grab power. Little known is that the Patriot Act is actually a laundry list of powers the executive branch had been seeking for many years but could never get from Congress - until a disaster struck, and they pushed it through under the (literal) guise of "patriotism"). >>
A "fiat money" system has an extremely flexible money supply. That is, in fact, the very thing many people do and don't like about it. It can be readily contracted or expanded based on the needs (or whims) of the issuing country. If there was a fiat system before the depression, the contraction in the money supply could have been swiftly corrected. If it really was the contraction in the money supply that caused the depression, the gold standard and its stabilizing effects would have been part of the problem.
I don't understand why people expect things to get better under a gold standard. I think the government intrusion that many gold-standard advocates hate would get worse. Your storehouse of value and protection against inflation would become a critical national security issue. Within months Congress would pass a "Gold Ownership Registration Act" arguing that gold as money means the government has a compelling interest in knowing all about it, lest speculators manipulate it or terrorists destroy hoards of it. It would become one more scarce commodity like oil that countries would bicker over.
I'd like to keep my gold ownership as private as possible.
I agree 200 % with Your last sentence !
<< <i>Rob, I spent 1 1/2 hrs watching that video Freedom to Facism and it is scary what is happening to my country. I really hope we as a people wake up before its too late.
Hide your gold and guns people. Its coming.. >>
This reminds of a quote by Sinclair Lewis:
"When fascism comes to America, it will be wrapped in the flag and carrying a cross."
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Who creates a great depression???? Maybe it all started from the greedy fools who owned 10 shares of stock while only paying for 1 share and prices plummeted, and, "OMG!!!! I have to pay more than I put into this investement!!!" Debt has been around for years, baby.
If you don't like the wealth going to the top, get off your "supposedly-on-the-bottom-lazy-a**** and do something about it. You don't know what on-the-bottom feels like. Go to Bangladesh for a month and see how long you would last.
The wealthy running the country??? What a surprise. Is this something NEW??? Thank Bill Gates, Sam Walton, etc. for creating so many jobs, so everyone can be a fat cat (vs. the MAJORITY of the REST of the world). Is someone out there even REQUIRED to give you a job???
What's with changing back to the gold standard??? If you are so right, tell your employer you only want to be paid in gold, and try paying for goods and services around town in gold. You'll be carrying a lot of heavy metal back to your car.
Don't bother discussing the illegality of owning gold back in the day. (Most weren't born yet in 1933). TODAY, you can own as much as you want!!!!
<<we could go along way from stopping things from getting worse.>> Are you saying things are bad now??? Are you in Poland???
<<people worldwide are turning to the Euro as the new world standard>> Hmmmm. Come to think of it, I like Europe. The old architecture, liveliness of the cities, no one seems to be materialistic, and most of the pedestrians are not the size of baby killer whales.
WHAT INFLATION??? Last I checked, my house payment has been the same for 10 years.
PUULEEEEEEEEEASE: You guys are writing this while you enjoy your warm home, watching basketball on your big screen TV, typing on your expensive computer (which most in the world can't even fathom), while smoking a cigar. Yep. The monetary system is SOOOO bad here. Ruining everyone's American dream.
<< <i>PUULEEEEEEEEEASE: You guys are writing this while you enjoy your warm home, watching basketball on your big screen TV, typing on your expensive computer (which most in the world can't even fathom), while smoking a cigar. Yep. The monetary system is SOOOO bad here. Ruining everyone's American dream. >>
Wow. Who peed in your Cheerios this morning?
Things are bad and will get worse. I guess you don't know there's a war going on and how that really happened.
Anyways, did you actually watch any of the videos? They are very informative and worth the time.
I do agree with you, a gold standard is probably a bad idea. Silver is better and the suggestions given by the other 2 videos (The Money Masters) offers a better suggestion.
Inflation.... I'm talking long term since there was a FR ... how has the dollar performed since say 1913?? The amount of US dollars doubles every few years. And as I said, now they won't even tell us how much they print.
There is NO gold in Fort Knox. The people running things are moving America into a one world government, and by definition that means that the US will have to give up it's sovereignty. Call me crazy but I believe in America and it's Constitution.
If you really knew what was going on, you wouldn't be so blazzay. You'll feel the crush of the New World Order, sooner or later my friend.
<< <i>Gloom and dooms at it again. I'M BAAAACK!!!!!
Who creates a great depression???? Maybe it all started from the greedy fools who owned 10 shares of stock while only paying for 1 share and prices plummeted, and, "OMG!!!! I have to pay more than I put into this investement!!!" Debt has been around for years, baby.
If you don't like the wealth going to the top, get off your "supposedly-on-the-bottom-lazy-a**** and do something about it. You don't know what on-the-bottom feels like. Go to Bangladesh for a month and see how long you would last.
The wealthy running the country??? What a surprise. Is this something NEW??? Thank Bill Gates, Sam Walton, etc. for creating so many jobs, so everyone can be a fat cat (vs. the MAJORITY of the REST of the world). Is someone out there even REQUIRED to give you a job???
What's with changing back to the gold standard??? If you are so right, tell your employer you only want to be paid in gold, and try paying for goods and services around town in gold. You'll be carrying a lot of heavy metal back to your car.
Don't bother discussing the illegality of owning gold back in the day. (Most weren't born yet in 1933). TODAY, you can own as much as you want!!!!
<<we could go along way from stopping things from getting worse.>> Are you saying things are bad now??? Are you in Poland???
<<people worldwide are turning to the Euro as the new world standard>> Hmmmm. Come to think of it, I like Europe. The old architecture, liveliness of the cities, no one seems to be materialistic, and most of the pedestrians are not the size of baby killer whales.
WHAT INFLATION??? Last I checked, my house payment has been the same for 10 years.
PUULEEEEEEEEEASE: You guys are writing this while you enjoy your warm home, watching basketball on your big screen TV, typing on your expensive computer (which most in the world can't even fathom), while smoking a cigar. Yep. The monetary system is SOOOO bad here. Ruining everyone's American dream. >>
<< <i>The gold was then collected in order to eventually steal actual real wealth from the American people and to replace it with fiat wealth called cash. >>
When a nation is tied to a metallic standard, it is impossible to increase the money supply without increasing the amount of backing metal. That's the whole argument behind the silver vs. gold standard debate. An economy cannot grow with a stagnant money supply; when the money supply (the amount of gold in the world) does not grow at the same rate as the economy, it causes major problems. The only way to allow an economy to grow unhindered is to enable the money supply to grow in tandem with the economy. Since you cannot do that on the gold standard (since you can't just create gold), you have to be on some sort of paper standard.
<< <i>Bring back some sort of gold and silver standard to our money! Stop the insane inflation that the dollar has undergone! >>
Yeah, there's a thought--let's shrink the money supply by several orders of magnitude and watch the economy crumble.
<< <i>You guys are writing this while you enjoy your warm home, watching basketball on your big screen TV, typing on your expensive computer (which most in the world can't even fathom), while smoking a cigar. Yep. The monetary system is SOOOO bad here. Ruining everyone's American dream. >>
Thank you. Finally someone with some sense. Wake up people: as Warren Buffett likes to point out, even the poorest college student lives better than Rockerfeller did 100 years ago. I call that progress.
<< <i>There is NO gold in Fort Knox. >>
Wow, the man's even been inside Fort Knox. Tell me, O Great Sage, is there anything that you are not an expert on?
What's with changing back to the gold standard??? If you are so right, tell your employer you only want to be paid in gold, and try paying for goods and services around town in gold. You'll be carrying a lot of heavy metal back to your car.
BS. I can take that gold to one of a dozen coin shops within a 25 mile radius of where I live. Or call up dozens of potential buyers and ship it out. There will come a time when people will be saying, "you know, I'd just assume get gold rather than cash." If I could do it, I'd be happy to accept gold from my employer. Who knows, this might teach the save-less generation to actually save something for a change. But we also know the govt would not tolerate people getting "useless" gold rather than fiat FRN's.
WHAT INFLATION??? Last I checked, my house payment has been the same for 10 years.
Maybe you didn't notice but the price of your home has probably doubled or tripled in the past 10 years....regardless if your payment is the same. You are a proud recipient of the pay back the lender more worthless greenbacks award....a key tenet in a fiat economy.
With the money stock increasing 13X, and gold no longer under full command of the CB's, you can expect some serious stag-flation coming at you. The Gold/Dow ratio is headed towards 1 as it has in previous cycles. Maybe it won't get to single digits but it's going in that direction.
The monetary system is SOOOO bad here. Ruining everyone's American dream.
Brought to you by owning the world's reserve currency since 1944,
closing the gold windown, keeping gold in check over the past 25 years due to heavy CB sales, and exporting our inflation overseas to underdeveloped nations. With China and India now flexing huge economic power how much longer will this lopsided game last?
roadrunner
I'm sure there has been some real decline in wages. But how much? Can anyone provide a link?
Are you kidding? So according to your theory, neither America (nor the rest of the world which was on the gold standard) could have experienced any economic growth before 1933. (Or, to give that idea the benefit of the doubt, the US economy couldn't have grown at any rate faster than the gold supply grew.) Just think about that for a second - it's obviously wrong.
Even if the money supply is fixed - so what? If the supply of the things that money buys (goods, services) is increasing, that just means those things will be getting cheaper over time relative to the money (gold) supply. The economy will still be growing in real terms even if the money supply is not.
It all makes such sense and answers so many unasked questions that I will point others in that direction.
I now agree they should be hanged but that will not happen, better they take their broken power schemes with them to their eventual demise and thats all I will say unless a PM discussion is warranted after the disbelievers watch the video's. Anything less would be pointless and futile.
The name is LEE!
<< <i>Are you kidding? So according to your theory, neither America (nor the rest of the world which was on the gold standard) could have experienced any economic growth before 1933. (Or, to give that idea the benefit of the doubt, the US economy couldn't have grown at any rate faster than the gold supply grew.) Just think about that for a second - it's obviously wrong. >>
This seems to be your theory, too. You said earlier:
<< <i>Milton Friedman and Anna Schwartz provided a thorough explanation for how the actual cause of the Great Depression was the Federal Reserve's severe reduction in the money supply. Obviously, this was not the only factor, but it appears to have been a much more signficant factor than the usual story that the 1929 stock market crash is what really caused the Great Depression. And so the government's response was -- instead of increasing the money supply -- was to make ownership of gold illegal >>
P.S. I said that the money supply must grow in tandem with the economy, not necessarily at the same rate. But I think it is just a touch logical to assume that if the economy grows by a factor of 50, the money supply must increase by a sizable amount. If there is an economist on the boards, feel free to correct me.
and replaced with paper silver certificates at face value.
The coins were melted down into those famous gold bars we have seen pictures of.
<< <i>
<< <i>Are you kidding? So according to your theory, neither America (nor the rest of the world which was on the gold standard) could have experienced any economic growth before 1933. (Or, to give that idea the benefit of the doubt, the US economy couldn't have grown at any rate faster than the gold supply grew.) Just think about that for a second - it's obviously wrong. >>
This seems to be your theory, too. >>
It's not my theory at all. The amount of money that exists is more a function of fractional reserve lending. The actual coins and paper currency in circulation is only a fraction of the total money that exists. What Friedman et al showed was that the Federal Reserve failed in its job of handling the fractional reserve lending part of the system.