Sunday 15 August 2021

i have directed secretary connolly to suspend temporarily the convertibility of the dollar into gold or other reserve assets, except in amounts and conditions determined to be in the interest of monetary stability and in the best interest of the united states

Effectively ending the economic arrangement among Canadian, Western Europe, Australia and Japan since 1944, the Bretton Woods system (see previously), the first fully negotiated monetary order recognised across independent polities that regulated exchange rates by pinning national currencies to the price of gold under the supervision of the International Monetary Fund, American president Richard Nixon announced, unilaterally, that on this day in 1971 the dollars could no longer be freely converted to their worth in gold. Rendered a fiat currency instead of a representation of intrinsic value, only upheld by the consent of the parties engaged in trade for goods or services, many other signatories soon followed suit and untethered their money. This jarring economic policy change was the culmination of several intervention strategies undertaken by the Nixon administration to curb inflation incurred as the world reserve currency (privilรจge exorbitant as the US could print money at virtually no cost, but subsidised by the rest of the world, each bank note expatriated cost face value in actual goods), preceded by wage and price freezes and raising tariffs. Loosing the ability to service indebtedness over the war in Vietnam, Nixon accused other nations of gaming the system and using established conventions to devalue their currency to maintain a competitive advantage. The US dollar dropped precipitously in value shortly thereafter and led to the the stagflation that typifies the decade and general failure of wages to rise proportionally with the increasing prices of vital things like healthcare, education, rents and food.