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Bitcoin BTC/USD critic and economist Peter Schiff issued warnings on Friday about America’s mounting debt crisis, linking current fiscal challenges to the 1971 decision that ended the gold standard. The warning comes as national debt has surged $9 trillion in four years to reach $37.09 trillion.
Historical Context Drives Current Concerns
Schiff posted on X that since former President Richard Nixon’s Aug. 15, 1971, decision to suspend dollar-gold convertibility, “the national debt soared by $9 trillion, and gold climbed by over 85%.” He shared a 2021 video titled “Remembering the Day When Gold Died,” marking the 54th anniversary of what he called America’s monetary system transformation.
The economist emphasized that Nixon’s move, initially described as temporary, permanently severed the dollar’s gold backing after 184 years. This shift allowed unlimited money printing without physical asset constraints, fundamentally altering fiscal discipline mechanisms.
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Market Performance Reflects Monetary Shift
Data from TradingEconomics shows the dollar index dropped 15.98% from 116.47 in August 1971 to 97.85 on Friday. Meanwhile, gold prices surged 2,240.57% from $142.70 per ounce in October 1975 to approximately $3,340 Friday.
Schiff’s warnings align with concerns from billionaire investor Ray Dalio, who recently suggested the U.S. could return to gold-backed currency. “History shows us that the same cycles repeat time and time again,” Dalio stated, citing patterns of currency devaluation and trust erosion.
Current Fiscal Trajectory Raises Red Flags
The national debt has soared $9 trillion since 2020, reflecting unprecedented monetary expansion during the pandemic era. Schiff argued this trajectory mirrors 1960s conditions that forced Nixon’s hand, when Great Society programs and Vietnam War spending strained gold reserves.
Investment strategists echo these concerns. Schwab’s Kathy Jones highlighted the dollar’s 7.62% decline this year, linking it to policies including tariffs and widening deficits. She warned these factors indicate “an unsustainable fiscal trajectory.”
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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