TIL that in 1971 Nixon ended the US gold standard in a single TV speech, and the decision was supposed to be temporary but became permanent, changing how all money works to this day
https://en.wikipedia.org/wiki/Nixon_shock
Posted by Tight-Lavishness-225
2 Comments
what’s wild is that most people have no idea this even happened. like we literally use a completely different money system now and nobody noticed LOL
He didn’t. The standard was ended by FDR in 1933 (stopped clock situation rather than good policy, fixing monetary policy was a side effect he didn’t know about).
Nixon ended gold convertibility, which was largely redundant by that point. Right after WW2 countries pegged their currencies to USD and the US had gold convertibility to help reestablish central banks in Europe. By the late 60’s nearly all countries had floated their currencies and a couple figured out they could game the gold convertibility to get a more favorable exchange rate.
USD floated and was exchangeable to gold at the central bank floating rate. Nixon ended convertibility because there was a balance of payments issue.
Economists had been pointing out since BW that the convertibility was unnecessary but there wasn’t much in the way of technocratic policy at the time so it took the balance of payments issue requiring its suspension to prove them right.