1
00:00:00,160 --> 00:00:04,200
I want to read Richard Nixons 
justification for why he got us 

2
00:00:04,200 --> 00:00:06,560
off the gold standard. 
I would like you to respond. 

3
00:00:06,800 --> 00:00:11,400
This is from RN, his memoirs. 
He says the second week of 

4
00:00:11,400 --> 00:00:14,080
August, the British ambassador 
appeared at the Treasury 

5
00:00:14,080 --> 00:00:17,880
Department to ask that $3 
billion be converted into gold. 

6
00:00:18,120 --> 00:00:21,840
Whether we honored or denied 
this request, the consequences 

7
00:00:21,840 --> 00:00:24,080
of our action would be fraught 
with danger. 

8
00:00:24,360 --> 00:00:27,040
If we gave the British the gold 
they wanted, then other 

9
00:00:27,040 --> 00:00:29,200
countries might rush to get 
theirs. 

10
00:00:29,400 --> 00:00:33,480
If we refused, then that would 
be an admission that our concern

11
00:00:33,720 --> 00:00:37,240
that we could not meet every 
potential demand for conversion 

12
00:00:37,400 --> 00:00:39,720
into gold. 
There was substantial 

13
00:00:39,720 --> 00:00:42,520
disagreement on closing the gold
window, in other words, 

14
00:00:42,640 --> 00:00:46,400
suspending the convertibility of
the dollar into gold. 

15
00:00:46,840 --> 00:00:50,320
I decided to close the gold 
window and let the dollar float 

16
00:00:50,680 --> 00:00:53,680
as events unfolded. 
This decision turned out to be 

17
00:00:53,920 --> 00:00:57,600
the best thing that came out of 
the whole economic program I 

18
00:00:57,600 --> 00:01:00,720
announced on August 15th of 
1971. 

19
00:01:01,720 --> 00:01:03,720
What is your response to 
President Nixon? 

20
00:01:04,239 --> 00:01:05,800
Well, first of all, the dollar 
didn't float. 

21
00:01:05,800 --> 00:01:10,040
It sank because when we, when we
went off the gold standard, well

22
00:01:10,040 --> 00:01:15,000
gold was so the gold price was 
$35.00 an ounce and they tried 

23
00:01:15,000 --> 00:01:17,560
to devalue the dollar twice and 
they they ended up at about 

24
00:01:17,560 --> 00:01:20,040
$42.00 an ounce when they closed
the window. 

25
00:01:20,480 --> 00:01:23,640
So you could buy an ounce of 
gold for $42.00. 

26
00:01:23,760 --> 00:01:26,400
Now, even with the drop the last
couple days, you still need 

27
00:01:26,400 --> 00:01:29,280
$2600 to buy that same ounce of 
gold. 

28
00:01:29,280 --> 00:01:31,560
So I wouldn't say that was a 
success. 

29
00:01:32,160 --> 00:01:35,160
You know, in fact, if you go 
back to the hearings that they 

30
00:01:35,160 --> 00:01:40,440
had on, you know, removing gold 
convertibility for the dollar 

31
00:01:40,440 --> 00:01:43,720
and, and by the way, the actual 
definition of a dollar as 

32
00:01:43,720 --> 00:01:47,560
defined by the Coinage Act of 
1792, the dollar was defined as 

33
00:01:47,560 --> 00:01:49,920
a weight of gold or silver. 
So that's actually what a dollar

34
00:01:49,920 --> 00:01:51,880
was. 
It wasn't a piece of paper. 

35
00:01:51,880 --> 00:01:54,080
It was actually a quantity of 
gold or silver. 

36
00:01:54,480 --> 00:01:56,440
But when they, when they were, 
you know, going to talk, when 

37
00:01:56,440 --> 00:02:00,160
they talked about removing gold 
backing, you had like the 

38
00:02:00,160 --> 00:02:02,840
secretary of the Treasury, the 
chairman of the Federal Reserve,

39
00:02:02,840 --> 00:02:05,080
they all, they all testified. 
Yeah, we should, you know, we 

40
00:02:05,080 --> 00:02:08,080
should, you know, detach the 
dollar from gold. 

41
00:02:08,520 --> 00:02:12,000
And their argument was that the 
dollar was propping up gold and 

42
00:02:12,000 --> 00:02:15,080
that if we could free the dollar
from gold, the dollar would rise

43
00:02:15,080 --> 00:02:19,400
and gold would fall. 
Like my father actually 

44
00:02:19,400 --> 00:02:21,960
testified. 
And he was the only people that 

45
00:02:21,960 --> 00:02:23,400
said, no, it's going to be the 
opposite. 

46
00:02:23,400 --> 00:02:26,640
And you're going to have price 
of inflation, gold's going to go

47
00:02:26,640 --> 00:02:28,200
up. 
You know, then he said a dollar 

48
00:02:28,200 --> 00:02:30,760
backed by nothing can't be 
better than a dollar backed by 

49
00:02:30,760 --> 00:02:34,320
something which which was true. 
And he and he, And so everything

50
00:02:34,320 --> 00:02:37,200
that he said in his testimony 
stood the test of time. 

51
00:02:37,680 --> 00:02:41,240
Everything the government 
experts said was completely 

52
00:02:41,240 --> 00:02:43,760
wrong. 
But, you know, the reason that 

53
00:02:43,920 --> 00:02:47,280
foreigners were trying to 
convert their Federal Reserve 

54
00:02:47,280 --> 00:02:50,880
notes to actual money was that 
was the deal we made with the 

55
00:02:50,880 --> 00:02:52,640
world. 
The world was on the gold 

56
00:02:52,640 --> 00:02:57,920
standard and we told the world, 
look, instead of having gold as 

57
00:02:57,920 --> 00:03:01,320
your reserve, have dollars 
because you can get the gold 

58
00:03:01,320 --> 00:03:05,120
whatever you want it just redeem
it, it's $3035.00 an ounce. 

59
00:03:05,960 --> 00:03:08,520
In the meantime, you can take 
those dollars and loan them to 

60
00:03:08,560 --> 00:03:11,080
us and buy our treasuries and 
you'll get interest. 

61
00:03:11,520 --> 00:03:14,600
So it's like a way, you know, 
you, you give us your gold, you 

62
00:03:14,600 --> 00:03:17,440
take these dollars, you loan 
them to us, we'll pay you 

63
00:03:17,440 --> 00:03:19,760
interest, but you can have your 
gold whenever you want it. 

64
00:03:20,360 --> 00:03:23,160
So it was a great deal for the 
world until we screwed them. 

65
00:03:23,800 --> 00:03:25,760
You know, they, you know, they 
talk about, oh, you know, we've 

66
00:03:25,760 --> 00:03:27,920
never defaulted. 
United States has never 

67
00:03:27,920 --> 00:03:30,760
defaulted. 
We 100% defaulted on all those 

68
00:03:30,760 --> 00:03:33,760
Federal Reserve notes because 
why do you think they're called 

69
00:03:33,760 --> 00:03:36,800
notes, right? 
And notice a promise to pay. 

70
00:03:37,320 --> 00:03:41,760
So we promise to pay foreigners 
gold if they had Federal Reserve

71
00:03:41,760 --> 00:03:43,480
notes. 
Well, when they tried to get 

72
00:03:43,840 --> 00:03:46,800
their gold that we promised to 
pay, we defaulted and we said 

73
00:03:46,800 --> 00:03:50,480
you can't have the gold, you 
know, So we have a history of 

74
00:03:50,480 --> 00:03:53,320
defaulting. 
But that is really was a 

75
00:03:53,320 --> 00:03:55,920
significant thing because once 
that happened and, you know, 

76
00:03:56,320 --> 00:03:58,320
gold went up to 850 pretty 
quickly. 

77
00:03:59,360 --> 00:04:02,400
And the dollar tank, you know, 
that's why oil prices went from 

78
00:04:02,400 --> 00:04:04,960
$3 a barrel to $30 a barrel, 
right? 

79
00:04:05,080 --> 00:04:07,240
It wasn't OPEC sticking it to 
us. 

80
00:04:07,440 --> 00:04:10,320
We try to stick it to OPEC. 
We try to buy their oil with 

81
00:04:10,320 --> 00:04:12,520
paper. 
We used to buy their oil with 

82
00:04:12,520 --> 00:04:14,400
gold and then we tried to pay 
paper. 

83
00:04:14,400 --> 00:04:16,920
They want you to pay paper. 
We need a lot more, you know. 

84
00:04:17,000 --> 00:04:20,360
And so the price went up. 
But what happened was Reagan 

85
00:04:20,360 --> 00:04:24,680
came along and the inflation 
scare and rates went up and then

86
00:04:24,680 --> 00:04:27,880
the world kind of went back, you
know, stayed on the dot. 

87
00:04:27,880 --> 00:04:30,520
The gold, the dollar standard, 
even though it wasn't backed by 

88
00:04:30,520 --> 00:04:32,680
gold, right? 
The original reason for Bretton 

89
00:04:32,680 --> 00:04:34,920
Wood was the dollars convertible
to gold. 

90
00:04:34,920 --> 00:04:36,440
This is as good as gold and 
that. 

91
00:04:36,440 --> 00:04:38,400
And we sold the world on that 
and they bought it. 

92
00:04:39,080 --> 00:04:45,240
We screwed them in 1971. 
And but then by the 80s, they 

93
00:04:45,240 --> 00:04:47,720
forgot about that. 
And they like, all right, let's 

94
00:04:47,720 --> 00:04:51,520
stick with the dollar anyway. 
And then the US was like, wait a

95
00:04:51,520 --> 00:04:54,520
minute, So we could just print 
dollars. 

96
00:04:55,480 --> 00:04:58,280
We don't have to have any gold. 
We just keep printing dollars. 

97
00:04:58,480 --> 00:05:01,320
It's like, imagine if you had a 
checkbook and you could just 

98
00:05:01,320 --> 00:05:04,080
write checks and nobody ever 
tried to cash them. 

99
00:05:04,960 --> 00:05:08,560
And once you realize that I can 
buy whatever I want, it doesn't 

100
00:05:08,600 --> 00:05:11,880
matter what I've got in a bank. 
And so we started flooding the 

101
00:05:11,880 --> 00:05:16,280
world with our worthless IO us 
and our whole economy changed. 

102
00:05:16,600 --> 00:05:18,160
Hey, we don't have to make stuff
anymore. 

103
00:05:18,200 --> 00:05:20,320
Let the Chinese make it. 
Let them deal with the 

104
00:05:20,320 --> 00:05:21,880
pollution. 
We'll just print some money and 

105
00:05:21,880 --> 00:05:24,240
give it to them. 
And so all of our factories 

106
00:05:24,240 --> 00:05:27,080
started shutting down and we 
started importing all the stuff 

107
00:05:27,080 --> 00:05:29,040
we weren't producing and paying 
for it by pretty money. 

108
00:05:29,040 --> 00:05:32,160
It was like a great deal. 
And the world is doing all the 

109
00:05:32,160 --> 00:05:34,920
hard work and they're just 
stockpiling our, our dollars, 

110
00:05:34,920 --> 00:05:36,600
our paper money that we create 
for nothing. 

111
00:05:36,920 --> 00:05:40,560
So we built up this whole 
service sector phony economy 

112
00:05:41,440 --> 00:05:45,680
and, and, and, and now it's at 
this extreme level because of 

113
00:05:45,680 --> 00:05:48,400
how, you know, long the dollar 
has been the reserve and how 

114
00:05:48,400 --> 00:05:51,320
we've been able to build up 
economy that under normal 

115
00:05:51,320 --> 00:05:53,480
circumstances could never 
survive. 

116
00:05:54,240 --> 00:05:57,160
And if the dollar's reserve 
status goes, I mean, we 

117
00:05:57,160 --> 00:06:00,240
collapse, you know, like a House
of Cards because, you know, 

118
00:06:00,880 --> 00:06:03,280
we're, we've never been more 
dependent on it than we are 

119
00:06:03,280 --> 00:06:06,080
right now. 
And, and, and, and, you know, we

120
00:06:06,080 --> 00:06:09,440
have this massive debt and we 
need to keep borrowing more and 

121
00:06:09,440 --> 00:06:12,880
more money to sustain it. 
But it's all in dollars. 

122
00:06:12,880 --> 00:06:15,920
So people have to have coffee. 
They want to have to loan us all

123
00:06:15,920 --> 00:06:18,640
these dollars even though we 
can't possibly repay the dollars

124
00:06:18,640 --> 00:06:21,400
we've already borrowed. 
All we can do is print more and 

125
00:06:21,400 --> 00:06:23,840
destroy their value. 
And, you know, the way our whole

126
00:06:23,880 --> 00:06:28,280
debt system works, nobody ever 
gets repaid anyway because 

127
00:06:28,360 --> 00:06:29,880
everything has to be rolled 
over. 

128
00:06:29,920 --> 00:06:32,640
I mean, the only way we can make
good on a treasury is if we can 

129
00:06:32,640 --> 00:06:34,360
sell another one to somebody 
else. 

130
00:06:34,360 --> 00:06:37,160
It's just a giant Ponzi scheme 
that has to get bigger and 

131
00:06:37,160 --> 00:06:39,480
bigger and bigger. 
But, you know, at some point, 

132
00:06:39,480 --> 00:06:42,200
the world is going to be OK. 
You know, this, this, you know, 

133
00:06:42,920 --> 00:06:44,920
this isn't going to work. 
We don't, we don't want to play 

134
00:06:44,920 --> 00:06:47,240
this game anymore because we 
know how it's going to end. 

135
00:06:48,480 --> 00:06:51,160
And, you know, maybe Trump will 
accelerate that once this 

136
00:06:51,160 --> 00:06:54,360
euphoria is gone. 
And the $36 trillion debt 

137
00:06:54,360 --> 00:06:57,960
quickly becomes 40 trillion, 45 
trillion, 50 trillion. 

138
00:06:58,120 --> 00:07:01,040
And it's like, you know, OK, you
know, and we just keep pretty 

139
00:07:01,040 --> 00:07:05,400
money, pretty money. 
The whole thing has got to 

140
00:07:05,400 --> 00:07:08,000
implode. 
And that's going to be a very 

141
00:07:08,000 --> 00:07:12,440
difficult adjustment process for
the United States because if we 

142
00:07:12,440 --> 00:07:16,040
can no longer depend on the 
dollar's reserve status, that 

143
00:07:16,040 --> 00:07:17,640
means we have to live within our
means. 

144
00:07:17,760 --> 00:07:21,360
That means we can't consume so 
much more than we produce. 

145
00:07:21,600 --> 00:07:24,280
That means we can't borrow so 
much more than we save. 

146
00:07:24,520 --> 00:07:27,880
But our whole economy is built 
on us doing that, right? 

147
00:07:28,960 --> 00:07:32,160
And So what happens when you 
have to restructure that 

148
00:07:32,160 --> 00:07:36,560
economy, when all the shopping 
centers strip have to shut down 

149
00:07:36,680 --> 00:07:39,480
because we there's nothing on 
the shelves, We can't keep 

150
00:07:39,480 --> 00:07:41,920
shopping anymore because we 
don't make any of this stuff 

151
00:07:41,920 --> 00:07:44,520
that was on those shelves. 
We have to start producing 

152
00:07:44,520 --> 00:07:46,920
things again. 
Now maybe it'll be easier with 

153
00:07:46,920 --> 00:07:49,960
with, you know, AI and robotics 
and stuff like that. 

154
00:07:49,960 --> 00:07:53,200
I mean, hopefully that will be 
something that makes rebuilding 

155
00:07:53,200 --> 00:07:57,320
the economy easier. 
But this whole artificial 

156
00:07:57,320 --> 00:08:00,120
economy has to collapse in order
for a real one to take its 

157
00:08:00,120 --> 00:08:01,800
place. 
That's why it hasn't happened, 

158
00:08:01,960 --> 00:08:05,520
because nobody wants to let the 
phony economy take collapse 

159
00:08:05,520 --> 00:08:09,120
because so many people are 
enjoying the phony economy, and 

160
00:08:09,120 --> 00:08:12,240
so many people would be hurt if 
we allowed it to collapse. 

161
00:08:12,240 --> 00:08:15,600
So we have to continue to 
sustain it. 

162
00:08:15,680 --> 00:08:19,320
But the more we sustain it, you 
know, the bigger the bubble gets

163
00:08:19,800 --> 00:08:22,840
and the more painful it 
ultimately is when it eventually

164
00:08:22,840 --> 00:08:24,480
collapses, which it always does.