The Broken Bretton Woods System
Lyn Alden discusses the flaws in the Bretton Woods system, the creation of financial infrastructure, and the role of the United States as a centralized hyperpower. She explains how the system was already broken before Nixon's default in 1971 and the impact of fractional reserve banking on gold reserves. David Hoffman adds an interesting anecdote about Nixon's decision to close Fort Knox while a French battleship was on its way to pick up gold.In this clip
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Bankless
193 - Lyn Alden's Masterclass On Money
Related Questions
What about the overt default by the U.S. government on its gold bonds in 1933? The United States had promised the bondholders to redeem these bonds in gold coin but then refused to do so, offering depreciated paper currency instead. The case went to the Supreme Court, which upheld the sovereign power of the government to default if it chose to. Justice Harlan Stone, a member of the majority, stated, “As much as I deplore this refusal to fulfill the solemn promise of bonds of the United States, the government, through the exercise of its sovereign power…has rendered itself immune from liability,” demonstrating the classic risk of lending to a sovereign. In “American Default,” Sebastian Edwards concludes that it was an “excusable default,” but clearly a default.
Were the U.S. defaults in 1933, 1968, and 1971 really defaults?
Did the U.S. government default in 1968 by refusing to honor its explicit promise to redeem silver certificate paper dollars for silver dollars?