What an incredible graph:
[source](https://twitter.com/FieldNas/status/1636074433831129091/photo/1)
Imagine it's the 1930's. Banks have gone bust, unemployment is sky high, the great depression is grinding on. The new president, Franklin Roosevelt seems like he's trying hard launching a torrent of new legislation setting up the FDIC and what not.
But he's also banned private holding of gold.
At the time, the US dollar was pegged to gold - every dollar had to be backed at least 40% by gold. That meant if the gold price was $350 an ounce, the US govt could print 875 dollars for every ounce of gold it held. If the price was $600 an ounce, they could print 1500 dollars per ounce they held.
Roosevelt lacked sufficient gold to finance his spending sprees.
So he resorted to a dirty trick. The **Trading with the Enemy Act** of 1917 allowed the government to compulsorily purchase all the gold in the USA. It was meant to be used in a war emergency in case WW1 dragged on. The war govt never used it - but Roosevelt did in 1933.
He signed executive order 6102 whch offered $20.67 dollars per troy ounce of gold. If you hadn't exchanged your gold by May 1933, you were liable to arrest and 10 years in jail if you got caught.
The US Federal Reserve tripled its gold reserves from 6,358 tonnes in 1930 to 19,543.30 tonnes by 1940 through this scheme.
Then the US govt changed the "official" price of gold in the US to $35 per troy ounce in 1934.
But the superpower in the 1930's was the British Empire and gold back then was priced in the Pound Sterling. The prices in the chart at the top are the international sterling price converted to dollars at the exchange rate at the time. Which means the real price of gold in 1930 was more like $300 an ounce. Americans got robbed by the US govt.
The British flatly refused to ban private ownership of gold anywhere in the empire. So if an American wished to secretly buy some gold because they were worried about the state of the banks, they just needed to make a quick trip to British Empire territory. Like those islands off the coast of Florida: the Cayman Islands and so on. How do you think they became financial centres? They were and still are offshoots of the City of London, servicing American demand.
Notice what happened to the international price when Roosevelt banned gold. The price rose as Americans secretly bought.
BTW, have people noticed that the Carribean is now becoming a centre for crypto as the US cracks down on bitcoin businesses? Some things never change.
hiveblocks