[InvisibleUp]

It’s Blackstone that’s investing in single-family homes, not BlackRock. They also only own 0.06% of US single-family housing stock. Easy mistake to make.

Also, there was absolutely inflation before Bretton Woods, and significantly worse inflation at that. See, for example, the hyperinflation during Weimar Germany which led to WWII. Or the nearly 10% deflation in the US during the Great Depression, which just exacerbated the effects by severely discouraging investment that would have helped kickstart the economy again. Post-Bretton Woods, major currencies are generally substantially more stable and predictable.

[greenavocado]

The Weimar hyperinflation wasn't caused by gold's limitations - it was the inevitable result of political cowardice and monetary arson. After WWI, Germany made the fatal decision to abandon gold convertibility and fund reparations through the printing press, transforming the mark from 4.2 to $1 in 1914 to 4.2 trillion to $1 by 1923. This wasn't some unavoidable monetary phenomenon but a deliberate policy choice to avoid fiscal responsibility. The Great Depression tells a similar story of government malpractice rather than gold standard failure. During the Roaring Twenties, the Federal Reserve artificially suppressed interest rates, creating massive distortions in credit markets and fueling the stock bubble. When the inevitable correction came, instead of allowing the market to clear, Hoover's administration compounded the crisis through disastrous interventions - hiking interest rates during a liquidity crunch, imposing Smoot-Hawley tariffs that strangled global trade, and strong-arming businesses into maintaining unsustainably high wages. The resulting deflationary spiral wasn't gold's fault but the direct consequence of central planning arrogance. The Bretton Woods system's collapse in 1971 followed the same pattern of political expediency overriding monetary integrity. The U.S. promised dollar convertibility at $35/oz gold but only to foreign governments while banning domestic ownership. When LBJ's simultaneous Vietnam War and Great Society spending spree drained U.S. gold reserves, Nixon simply severed the dollar's last tether to reality rather than confront fiscal discipline. The post-Bretton Woods era of pure fiat has created the illusion of stability while systematically eroding purchasing power - the dollar has lost 87% of its value since 1971, with the Fed responding to every crisis by printing trillions to bail out financial elites while main street struggles under crushing inflation. Weimar, the Depression, and Bretton Woods all share the same root cause: governments refusing to accept that money must be anchored to something beyond political whims. Gold doesn't cause collapses. It reveals them. Fiat doesn't prevent crises , it merely delays them while making the eventual reckoning worse. The historical record is clear: when governments treat money as a policy tool rather than a sacred trust, the result is always catastrophe dressed in different eras' clothing. Today's $35 trillion debt and monetary debasement suggest we've learned nothing from these lessons.

[nthingtohide]

here's a counterpoint.

https://en.wikipedia.org/wiki/Lords_of_Finance

> One of the main themes of the book is the role played by the central bankers' insistence to adhere to the gold standard "even in the face of total catastrophe."[1] As Joe Nocera, a book reviewer at the New York Times, stated, "the central bankers were prisoners of the economic orthodoxy of their time: the powerful belief that sound monetary policy had to revolve around the gold standard...Again and again, this straitjacket caused the central bankers — especially Norman, gold’s most fervent advocate — to make moves, like raising interest rates, that would allow their countries to hold on to their dwindling gold supplies, even though the larger economy desperately needed help in the form of lower interest rates."

[greenavocado]

The argument that the gold standard was some kind of economic straitjacket that worsened the Great Depression is nothing more than elite gaslighting, a convenient myth peddled by central bankers and Keynesian apologists to justify their disastrous experiments with fiat money. The reality is that the gold standard didn't fail; governments and central banks did.

Take Britain's catastrophic return to gold in 1925. Churchill, egged on by Montagu Norman at the Bank of England, made the fatal error of pegging the pound at its pre-war parity, overvaluing it by 10-20%. This wasn't gold's fault, it was sheer political hubris. Had they adjusted the peg to reflect actual economic conditions, the ensuing deflationary spiral could have been avoided. Instead, British industry was crushed under the weight of an artificially strong currency, all so London's financial elites could cling to the illusion of imperial prestige.

Then there's France, whose central bank, rather than stabilizing the global monetary system, hoarded gold, which ended up sucking liquidity out of the world economy. And let's not forget the Federal Reserve, which in the early 1930s raised interest rates during a depression to defend gold reserves, turning a recession into a full-blown catastrophe. These weren't flaws of the gold standard, they were acts of economic malpractice by central bankers who either didn't understand the system or deliberately sabotaged it to serve creditor interests.

The classical gold standard, which had functioned smoothly for nearly two centuries before World War I, delivered price stability, facilitated global trade, and forced fiscal discipline on governments. It only broke down when politicians, eager to fund their wars and welfare schemes, suspended convertibility, then tried to haphazardly reinstate it in the 1920s without proper adjustments. The problem wasn't gold; it was the refusal of policymakers to play by the rules.

The truth is, central bankers like Norman didn't cling to the gold standard out of blind orthodoxy, they used it as cover for deflationary policies that protected the financial elite at the expense of workers and industry. The Bank of England sacrificed British manufacturing to maintain London's position as a financial hub. The Fed tightened money when it should have eased, deepening the Depression. The Banque de France hoarded gold, destabilizing the global system. These weren't "prisoners of economic dogma", they were architects of disaster, hiding behind gold to justify their incompetence.

And what did we get when we abandoned gold for the "flexibility" of fiat money? The stagflation of the 1970s, the financial crises of 2008, and the inflation surge of the 2020s, each one a direct result of central banks printing money with no anchor to reality. The Keynesian promise that we could spend and inflate our way to prosperity has been exposed as a lie. The gold standard didn't fail; governments failed the gold standard, and now we're paying the price.

The lesson of history is clear. Every time we discard monetary discipline, we get short-term euphoria followed by long-term collapse. The "gold standard caused the Depression" narrative is nothing more than a smokescreen, designed to absolve the real culprits, central planners and political elites, of their catastrophic mistakes. The bill always comes due, and this time, it's going to be paid in devalued dollars and economic ruin.

Further reading: "Did France Cause the Great Depression? by Douglas A. Irwin"

[nthingtohide]

As long as US Dollar supply was increasing at the rate of 2% per year (I don't know the exact rate but some predictable small rate) which is commensurate with Gold supply increase, everything was ok with the world, nobody cared whether it was USD or Gold. It is only when US started abusing this privilege that system started breaking.

[greenavocado]

The claim that the dollar system worked perfectly until the Fed got greedy is pure fantasy. The post-WWII Bretton Woods system wasn't a gold standard, it was a dollar hegemony masquerading as one, a rigged game where America played banker to the world while quietly running the printing press overtime. The U.S. promised dollars convertible to gold at $35 an ounce, but only for foreign governments, while internally, the Federal Reserve and Treasury operated with the restraint of a coked-up stockbroker. This was never sustainable. By 1971, the U.S. had a mere $24 billion in gold reserves backing $140 billion in foreign-held dollars, a laughable imbalance Nixon tried to conceal with capital controls and strong-arm diplomacy. But when France, under the leadership of then-President Georges Pompidou (a former Rothschild banker who, unlike today's economists, actually understood monetary games), started demanding physical gold in exchange for its dollar reserves, the gig was up. The London Gold Pool, a desperate central bank cartel formed in 1961 to artificially suppress gold's price, collapsed by 1968, precisely because the market smelled the rot.

The idea that the Fed "matched" gold supply growth with disciplined printing is historical revisionism at its worst. Throughout the 1950s, the Fed quietly monetized Treasury debt to bankroll Cold War spending. By the 1960s, it was cranking the dollar printer into overdrive to fund Vietnam and LBJ's Great Society fantasies, policies that sent inflation to 6% by 1969, even as the Fed kept interest rates below inflation (a.k.a. financial sabotage of savers). The so-called "2% rule" was fiction; the Fed was juicing the system for political convenience long before Nixon officially torched the gold window. And let's not forget the Fed's role in the speculative Eurodollar market, where offshore dollar lending exploded without reserve requirements, an early preview of the unregulated shadow banking systems that would later implode in 2008.

The fatal flaw was baked into the Bretton Woods design from day one, a paradox economist Robert Triffin warned about in 1960: To serve as the world's reserve currency, the U.S. had to supply dollars globally, but the more dollars it printed to meet demand, the shakier confidence in its gold backing became. This wasn't an accident; it was a structural time bomb. By the late 1960s, foreign central banks were drowning in dollars they couldn't redeem without triggering a run on Fort Knox. Meanwhile, the U.S. hollowed out its own industrial base, outsourcing manufacturing to Asia and Germany while replacing real production with financialization, Wall Street alchemy turning debt into "wealth."

Fast-forward to today, and the chickens are coming home to roost with a vengeance. The dollar's purchasing power has cratered, 92% loss since 1971. The national debt has ballooned to $35 trillion, nearly triple U.S. GDP. Decades of negative real interest rates have turbocharged asset bubbles, turning housing into a speculative casino while wages stagnate. And now, thanks to Washington's rampant weaponization of dollar sanctions, the BRICS nations are actively dismantling the dollar's reserve status, with China stockpiling gold and brokering oil deals in yuan. The Fed's response? More printing, more deficits, more pretending the laws of monetary gravity don't apply.

The breakdown wasn't caused by "abuse" of the dollar system, it was the inevitable result of a system designed to be abused. Fiat currencies don't fail because people mismanage them; they fail because they enable mismanagement. Gold didn't collapse in 1971, the U.S. government simply abandoned it to avoid fiscal accountability. Now we're stuck with the consequences: a financialized husk of an economy where billionaires mint fortunes in leveraged speculation while workers get paid in depreciating digits.

[nthingtohide]

I have question. If new value is produced in the system (say an iphone or google search), isn't it ok to produce more dollars to represent that value, which is also the reason why people didn't care for decades, because the system was working.

[nthingtohide]

Good points. I stand corrected.

[porridgeraisin]

Can't remember the last time I agreed with every sentence in an HN comment.

[HelloMcFly]

> They also only own 0.06% of US single-family housing stock.

This is one of those situations where averages hide the harm. Yes, when you look across everything it's not a big deal. But you can find clear instances where it is a problem, particularly in homes of certain value in growing markets (like Atlanta: https://www.ajc.com/news/atlanta-news/data-investors-now-own...).