Tumble down
Record high for the Dow today, while the US dollar suffers further (see below).
The dollar ended the day at its lowest level ever in the history of a trade-weighted basket of seven major currencies tracked by the Federal Reserve for the past 34 years.
The dollar also neared a record low versus the euro after a government report showed that sales of new homes undershot expectations in March, backing a view that a faltering housing market will lead the Federal Reserve to cut interest rates.
posted by theBhc at 8:03 PM
1 Comments:
While there maybe a gold standard law on the books, this has been ignored by Nixon, the Fed and every administration since 1971.
In 1971 more and more dollars were being printed in Washington, then being pumped overseas, to pay for the nation's military expenditures and private investments. In the first six months of 1971, assets for $22 billion fled the United States. In response, on August 15, 1971, Nixon unilaterally imposed 90-day wage and price controls, a 10% import surcharge, and most importantly "closed(ing) the gold window," making the dollar inconvertible to gold directly, except on the open market. Unusually, this decision was made without consulting members of the international monetary system or even with his own State Department, and was soon dubbed the Nixon shock.
If the dollar were tied to gold, a rise in gold price would be equivalent to a rise in the US dollar. That does not happen and has not happened since 1971.
Since 1976, all major world currencies float on currency markets. Gold-backing of the Swiss franc ended in 2000.
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