Written by Richard Nixon
On August 15, 1971, President Nixon announced on TV 3 dramatic changes in economic policy. He imposed a wage-price freeze. He ended the Bretton Woods international monetary system. And he imposed a temporary surcharge (tariff) on all imports. The Bretton Woods system was created towards the end of World War II and involved fixed exchange rates with the U.S. dollar as the key currency - but also a role for gold linked to the dollar at $35/ounce.
Almost immediately after President Richard Nixon took the US off the gold standard, the price of gold began to rise and the dollar lost value and has been increasing in value, cyclically, ever since.
The United States has faced a massive amount of monetary inflation since 1933. Among these factors is the removal of the gold standard. Supporters of the free market support the concepts of the gold standard, if for no other reason, simply because it removes the risks that inflatable fiat currency brings. The moves in 1933 also makes many question if the bounds of the federal government had been violated by forbidding the private ownership of anything, gold included.
With the economic crisis of the first decade of the 2000s, it is likely that some sort of gold standard will be re-imposed either by the market itself or voluntarily by countries. The dollar-reserve system is under tremendous pressure with all paper currencies regularly losing value. The situation likely cannot continue. The 21st century may see a renewed gold standard of some sort, privately engaged or imposed by governments.
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