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  • Why U.S. Gov't Confiscated Gold in 1933. Can it Happen Again?



    More and more investors are asking this question. Many observers and commentators have ridiculed this idea as archaic with the conditions that led to the confiscation being so different as to leave such a possibility as remote as the return of the dinosaurs.

    In this the first part of a series on the subject we look at the picture that led to the confiscation and look at factors that caused the confiscation to see if there are reasons why it can happen again, today!

    At the left, you will see the actual executive order in which U.S. citizens lost the right to own gold. From May 1st 1933 until 1974, U.S. citizens could no longer hold gold as a protection against paper money, which also lost its gold backing at the same time.
    Foreign central banks could continue to exchange the U.S. dollars that came into their possession -known as Eurodollars for decades—for gold and did so particularly when the U.S. dollar was devalued and then floated against the gold price in 1971.
    Why?
    The “why” is critical to our understanding of the current, global monetary system! There were two distinct phases to the process that began in 1933.
    1.The U.S. monetary and banking system contributed to a large extent to the depression. As Mr. Ben Bernanke has aptly demonstrated by his Quantitative Easing, a reduction in the money supply shrinks economic activity significantly and breeds deflation. After four years of such shrinkage, it was realized that a huge increase in the money supply was needed to invigorate the U.S. economy and make assets preferable to cash. The monetary system was based on the


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