This is the third in a series of four videos exploring the value of money created to mark the 50th anniversary of the final end of the gold standard, which happened when President Richard Nixon of the USA broke the link between the dollar and gold on 15 August 1971.
In previous videos I have explained that money is not asset-backed now. The only thing that gives money its value is the government's promise to pay. Then I have explained why in a well-controlled economy that promise is easy for a government to make because it's backed by its ability to tax.
In this video I explain that the limit on the government's ability to create money is not now the amount of gold it has, but instead the resources it can command in the real economy that it manages. Those resources are at their limit when there's full employment - and for that reason full employment is now the point where the limit to money creation is reached.
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Richard
did you make a slip at about 5.30 (when you scratched your nose) saying “the constraint that existed until 1981”, did you mean 1971?
Typo
Sorry
no need to apologise. You had already given the chronology.
It’s the internal teacher. 37 years conditioning.
[…] this final video in a mini-series on how money has got its value in the fifty years since the final link between money and gold was broken I look at the issue that […]