US president, Franklin Roosevelt set in motion the decline of the dollar in 1933. When Americans were no longer allowed the simple exchange of paper currency for an equal value of precious metal, they should have known they were in trouble. The dollar’s fate was sealed in 1971 when President Nixon decreed that no government could exchange paper for gold. Eventual fiscal inflation was virtually secured.
Prior to gold standard abandonment, paper dollars were considered reserves, since they were backed, and could be converted into gold at a guaranteed price. The immediate effect of dumping the gold standard was that countries who had previously purchased fiat currency for cash reserves, found only paper in their hands. Dollars no longer backed by tangible precious metals could be printed with reckless abandon.
The practical outcome for those who realized the price they would ultimately pay, happened in the late 1960s. A run on US banks occurred, as US currency holders sought to convert soon-to-be worthless dollars into precious metals. Withdrawing backing for fiat currencies amounts to a one-hundred percent government default on the value of money. The government has withdrawn their previous promise to redeem government issued paper.
Modern investors need not speculate as to the value of their precious metals investments, like silver and gold. Historically, no fiat currency system has ever succeeded, when disengaged from the intrinsically valued asset that supports it.
http:www.cmi-gold-silver.co/gold-standard-inflation-fiat-money.html
