All that glisters is not gold;
Often have you heard that told:
Many a man his life hath sold
But my outside to behold:
Gilded tombs do worms enfold.
Had you been as wise as bold,
Young in limbs, in judgement old
Your answer had not been inscroll’d
Fare you well, your suit is cold.
I boarded a KC-130 cargo plane on August 15, 1971 for a free ride to Rio de Janeiro, with an intermediate stop in Panama. The next morning I reported to Howard Air-force Base operations and got a “sorry Charlie” no flight to Brazil today – Nixon closed the Gold Window – nobody knows what to do.
I never liked ‘Tricky Dick’ after I stood on the curb to wave at his caravan from the Cincinnati airport when he was the 1960 Republican candidate running against JFK. My enigmatic mother had raised me to read body language at the attenuated level of today’s most sophisticated facial recognition software. I voted for George Wallace in 1968 as a protest vote in the Nixon-Humphrey presidential race. Although I was drafted twice in the Vietnam era, what really hurt was Nixon’s signature on my Honorable Discharge document.
I was serving my last six months of military service as a recruiter in the OSO (Officer Selection Office) in my hometown Cincinnati, Ohio, when an USAF sergeant touted space-available free air travel on MAC flights. All I had to do was drive to Charleston, SC. and get on a jet plane – the embassy-run – going on it’s weekly visit to the ten capitals of South America. All went well, the Howard AFB softball baseball team and I were the only passengers riding inside this empty 747 sized aircraft. Four hours later we arrived at the base and my only confusion was asking for directions to the BOQ which is called VOQ (Visiting Officers Quarters) in air force lingo.
It wasn’t until Brexit, QE (Quantitative Easing), Lehman Brothers and the 2008 crash, that I began to realize what Tricky Dick had done to the world economy 45 years ago. I got a ‘D’ in economics but after university I got an ‘A’ in new home sales because I knew enough about how-it-works to explain 100% financing, as no money down, to my first time home buyers.
However, the ‘invisible hand’ of Richard Nixon reaffirmed my lack of economic acumen when I took a liar loan (stated income) from Citi-mortgage in January 2008, using the naive thought that if the bank gives you the money it must be okay. When I should have gone with if you don’t need the money, it’s okay. Tricky Dick’s trick was to renege on the Bretton Woods Agreement.
All the king’s men and all the king’s horses met at the George Washington Hotel in Bretton Woods, New York to let the US dollar be the world’s reserve currency as long as it was linked to gold, $35/oz in 1971. Truman, Eisenhower, and JFK played by the rules of the agreement but LBJ couldn’t pay for his “guns and butter” agenda of Vietnam and the ‘Great Society.’ Therefore, in 1965 and 1968 Congress helped him out by removing the 25% dollar/gold cover – every Federal Reserve Note issued they were required to have 1/4th of the denomination in bank vault gold.
This action allowed the Fed to print money to its heart’s content and enabled the politicians to spend it to infinity and beyond. The ‘Nixon Shock’ followed me to Park Ridge, Illinois Hillary Clinton’s hometown. I was hired by The Austin Company in May 1974 to watch while inflation went to 12% and the interest rate hit 21%. My East European co-workers opened Swiss bank accounts and contemplated the firm’s $100 offer if we bought a GM car, under the, “What’s good for General Motors is good for the country,” banner.
Now I understand the ’73 Oil Embargo. The Saudi’s were paid in dollars and after Nixon debased the currency they raised the price from $2.50 a barrel to $25.00. Oil became liquid gold with an inverse relationship with the dollar. The more money the Fed prints the higher per barrel price of oil. That was true until 2015 when global GDP stopped growing and the demand for oil fell way below the supply.
My father made me a jitney, the forerunner of the go-kart. He put a lawnmower motor in my Red Flyer wagon and off I went cruising the neighbor at sub 20 mph speeds because he wisely installed a governor on the engine – no matter how much I put the pedal to the metal I couldn’t go above the twenty mark. So, you see what Tricky Dick did on August 15th, 1971 was remove the governor entirely – no more four to one ratio for gold backed Federal Reserve Bank Notes, just let her rip.