Would you love to see the US government proclaim that the gold price is $8,000 per troy ounce? How about if that was a year after the US government proclaimed that they're "nationalizing" all your gold and paying you $2,000 per ounce for it? In the 1920's your $20 bill could have been a gold certificate, and you could change it into gold coins if you wanted. $20 in gold coins would contain about 0.967 troy ounce of pure gold, worth approximately $1560 at July, 2012 prices. As long as you always had this convenient option, there was nothing to complain about with paper gold, or paper money, because it was convertible "on demand" into physical bullion coins. Maybe you could complain that the price was fixed by government fiat at $20.67 per troy ounce, but if you did, that was soon to change. March 9, 1933 President Roosevelt issued an executive order that required most Americans to turn in their gold at a bit over $20 per ounce. You could keep $100 in gold coin, per person. Less than a year later Roosevelt announced that he was cutting the value of the dollar almost in half, to 59% of its previous value. In other words, the dollars he gave you for your gold coins or certificates were now worth 59% compared to the gold you surrendered. Good deal? For Roosevelt. But Roosevelt pledged to keep the dollar value within 50 - 60% of its previous value. So 59% was cool. However, today in 2012, the devalued dollar is worth less than 2% of the gold dollars Roosevelt "nationalized" out of everybody's pockets, sock drawers, and safe deposit boxes. The plan worked, and barely anyone is left who remembers. And we should qualify "Americans" and "everyone" because licenses were issued (exceptions) for certain people, and industries, and gold miners mining new gold in August, 1933 after the "nationalization" It was an "emergency" that did not end for 40 years.

• published: 30 Jul 2012
• views: 2316