Why a Bitcoin 6102 Won't Happen

Executive Order 6102 back in 1933 required Americans to turn in their gold coins. There are several misconceptions about the details of the program that make people unreasonably worried about a similar government action today in regards to bitcoin.

First, gold was not confiscated in the purest sense of the word. Every American was told to turn in their gold coins and paid $20.67/oz. It was "compulsory" and reprehensible but people often have the idea that gold was seized outright without compensation, which was not the case. It was a buy back program of sorts.

Second, not all the gold was taken, not even close. According to SD Bullion's analysis, 85,680,604 ounces of gold were bought back amounting to 27.44% of gold in circulation. There were also quite liberal exemptions. Artists, jewelers, dentists, collectors and where gold was used in industry were not subject to the order. On top of that, each person was allowed to keep 5 ounces - $100 dollars at the time and roughly $10,000 in gold today.

The reasons behind the order are also often mischaracterized. Yes, the government wanted to print more money, but why didn't they just do that? Why did they have to confiscate the gold? The dollar was backed by gold in the Federal Reserve Act of 1913, which required the dollar be backed 40% by gold. However, by the time of the Great Depression in 1929, the government was running up on that limit to print more paper dollars to stimulate the economy in recession. Love it or hate it, the gold backing along with the Great Depression is what drove FDR to issue Executive Order 6102.

Today, we simply do not have the same forces at play. The dollar is not backed by bitcoin (yet) and we are not in a deep deflationary depression like the Great Depression. Most believe we are suffering from high levels of inflation.

Back in 1933, a high percentage of the population held gold versus very few holding bitcoin today. Politicians and their Keynesian economists blamed the Great Depression on people hoarding gold and silver, lowering circulation and keeping the economy from recovering. FDR wanted to ramp up circulation of money, again in an attempt to end the depression.

Today, the-powers-that-be do not face those same limitations imposed by a currency backing. The current Silent Depression is not blamed on people hoarding bitcoin. Confiscating bitcoin would not allow the government to print more money. Bitcoin is not legal tender, and would not be subject to a revaluation like gold was.

Another big difference between the 1930's and the 2020's, as highlighted by Balaji in a recent tweet, that the 1930's was during an era of growing centralization of power for governments. It was between the world wars, emphasis was on competitive national industrial output and control of the commanding heights in the economy.

All these things are moving the other direction today. We are headed into an era of more decentralization. International order is breaking down, US hegemony is waning, and the prominent political aim is to break the economy through cultural revolution, not fix it. The modern elites want to humble the US by keep it dependent on international trade and the world dependent on the US military. In other words, avoid US isolationism. The US naturally sliding back from its hegemony is the opposite to the situation in the 1930's.

Lastly, the elites are more dependent on the fragile financial system than the plebs who don't have any money. The system, being credit-based and leveraged, is only sustainable with high levels of trust in regulators and other participants. Arbitrarily seizing bitcoin would undermine that trust dramatically, especially because many billionaires and millionaires own bitcoin, it has massive traditional financial products riding on it. The elites have more to lose.

Summary

The original 6102 was not as bad as many think. It was wrong and extremely unpopular but they did not seize gold from Americans without compensation. They also only took 27% of gold in circulation and had many exemptions for individuals and professionals.

The overriding factor leading to 6102 was the gold standard and we don't have a bitcoin standard (yet) plus the Great Depression. The tyrannical executive order happened within a time characterized by a centralizing of power versus today, where we are on a path toward more decentralization. Finally, the elites have more to lose from loss in faith of the system, property rights and market trust.

For those reasons, a Bitcoin 6102 is highly unlikely in the foreseeable future.