After the bombing of Pearl Harbor, President Franklin D. Roosevelt called Dec. 7, 1941, “A date that will live in infamy.â€
When it comes to the US monetary system, June 5, 1933 should share that ignoble title, because that date marks the beginning of a slow death of the dollar.
Eighty-two years ago, the US went off the gold standard when Congress enacted a joint resolution erasing the right of creditors to demand payment in gold. The move was the culmination of actions taken by Roosevelt that year.
In March 1933, the president prohibited banks from paying out or exporting gold. In April of that same year, Roosevelt signed Executive Order 6102. It was touted as a measure to stop hoarding, but was in reality a massive confiscation scheme. The order required private citizens, partnerships, associations and corporations to turn in all but small amounts of gold to the Federal Reserve in exchange for $20.67 per ounce.
As Peter Schiff points out in his Classic Gold Scams report, despite hefty fines and long prison terms, the government did little to enforce the confiscation order:
Even in the heat of Roosevelt’s confiscation scheme, government troops did not break into people’s homes… Ironically, all the gold actually collected by the Treasury was willfully surrendered in a wave of misguided patriotism, while many ‘law-breakers’ simply kept their gold.â€
That’s an important point to keep in mind when coin dealers try to convince you that only their gold coins will remain safe in the next wave of confiscation. Fears of confiscation in today’s world are blown far out of proportion and should not dissuade you from protecting your wealth with highly liquid gold and silver coins.
The purpose of Roosevelt’s executive order was to remove constraints on inflating the money supply. The Federal Reserve Act required all notes have 40% gold backing. But the Fed was low on gold and up against the limit. By increasing its gold stores, the Fed could circulate more notes.
