On Sunday, August 15, 1971, Richard Nixon unilaterally brought to an end the last trace of an experiment in international monetary affairs that stretched back over a century. He announced that the United States government would no longer abide by the 1944 Bretton Woods agreement to deliver gold at $35 per ounce to any government or central bank.
What he abolished was not a gold standard. It was a government promise standard. There was never a gold standard in the nineteenth century or early twentieth century. It was always a government promise standard. It was as reliable as government promises...
...A free market gold standard should be the result of two legal arrangements: (1) open entry into the money business, (2) the enforcement of contracts. Gold would become one common currency. So would silver, if history is a guide. The government would get out of the money business altogether. It would claim no unique authority over money. It would decide the monetary unit in which to collect taxes – nothing more. It would enforce contracts, meaning lawful voluntary exchanges in which no fraud is involved.
This would decentralize and privatize money creation. It would also privatize and decentralize the fraud of counterfeiting. It would pit bankers against bankers, who would participate in bank runs against suspected banks. It would decentralize the enforcement against fraud.
By removing monetary sovereignty from governments, this arrangement would permanently keep fraud from becoming centralized and a matter of law. It would keep the fox of government away from the chicken coop of money creation. It would make impossible any replay of the string of broken contracts, 1914 to 1971, which marked the government promises standard which masqueraded as a gold coin standard, then a gold exchange standard, then a Tricky Dick Nixon standard...
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