"... confiscated all the gold held by Americans and ended the ability of American's to trade their US Dollars for gold. Why? So that we could continue to support foreigners being allowed to trade THEIR US Dollars for gold. "

The majority of the victims of the US gold bond default were non-US investors.

More seriously, the US government was broke and admittedly had little choice. Had they similarly halted the exhangeability of gold for non-US central banks (not all "foreigners"), what remained of the US and global economy would have crumbled, which it nearly did anyway. The only real reason any material amount of gold was redeemed by those entities 1934-1971 is because the fixed exchange rates and gold backed currency of Bretton Woods (or any other similar regime) could never have lasted forever. Pressures build, then it goes pop.

As it was, the US managed to come up with a wonderfully circular bit of legal reasoning about the default to save face, and managed not to turn into Argentina.

Jim

Berkshire Hathaway FAQ

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