What happened and why
This year marked the 50th anniversary of President Nixons decision to unilaterally close thegold window. The impact of this move can hardly be overstated. It triggered a tectonic shift of momentous consequences and it changed not just the global economy and the monetary realities, but it also shaped modern politics and severely affected our society at large.
In July 1944, representatives from 44 nations convened in the resort town of Bretton Woods, New Hampshire, to figure out how the global monetary system should be structured after the end of the war. The US took the clear lead during these talks, exploiting the considerable leverage it had over other countries devastated by WWII or even still occupied by Germany. After all, at that point, Americans were the creditors of the world and had accumulated tons of gold throughout the 1930s and during the war, as the US was widely seen as a safe haven amid the conflict and uncertainty that prevailed at the time.
Thus, theBretton WoodsAgreement was born, under which the U.S. pledged to convert into gold any dollars brought by other countriescentral banks at a rate of $35/oz, while the currencies of the other participating countries were to be convertible into USD at a fixed rate. What this meant in practice, was that the USD became the dominantreserve currency and the fundament of entire financial system of the West, while the gold peg was reduced to amanaged version, through artificial price controls, that was always doomed to fail.
Indeed, the Bretton Woods system didnt last long. It wasnt fully implemented until 1958 and by the mid 60s it was already obvious that its days were numbered. The US gold stockpiles were dwindling as European central banks soon began redeeming their dollar claims, and there were real fears that US gold holdings might eventually be exhausted. Also, the Bretton Woods system, even though it wasmanaged and much weaker form of the classical gold standard, did still at least partially keep government spending and deficits in check, something that Nixon resented, especially with a view to the next election.
And so, on August 15, 1971, President Richard Nixon announced his decision close thegold window, and end the convertibility of USD to gold. He thereby severed the final link between the US currency and any real asset that backed it and gave rise to the new era of totally unrestrained fiat money, that could be manipulated, printed and distributed on the whim of state central planners. In one fell swoop, money lost whatever integrity and reliability it had left and it was turned into a purely political tool, if not a weapon.
In his televised address to the nation and to the world, President Nixon justified his decision by claiming thatprosperity without war requires action on three fronts. We must create more and better jobs; we must stop the rise in the cost of living; we must protect the dollar from the attacks of international money speculators.
As we all know by now, none of these goals were meat. In fact, the result of this unilateral move to extinguish the last vestiges of the gold standard achieved the exact opposite, on all fronts. It unleashed decades of inflationary policies, turbulence in currency markets, and it laid the foundations for an economic and financial system that is dangerously unstable, fragile and fundamentally unjust. All these implications are plain to see today, but the Presidents actions were celebrated by the US establishment of the time. The Dow Jones Average rose the day after the address, while the New York Times unreservedly expressed its support, by writingwe unhesitatingly applaud the boldness with which the President has moved on all economic fronts.
And yet, there were a few voices that spoke out, for common sense and Reason. As the Cato Institute outlined,Milton Friedman wrote in his Newsweek column that the price controlswill end as all previous attempts to freeze prices and wages have ended, from the time of the Roman emperor Diocletian to the present, in utter failure. Ayn Rand gave alecture about the program titledThe Moratorium on Brains and denounced it in her newsletter. Alan Reynolds, now aCato senior fellow, wrote in National Review that wage and price controls weretyranny necessarily selective and discriminatory and unworkable. Murray Rothbard declared in the New York Times that on August 15fascism came to America and that the promise to control prices wasa fraud and ahoax given that it was accompanied by atariff increase.
At the time, many opponents of the truly free market tried to shut down and stifle any and all dissenting views, dismissing all these concerns as hysterical overreactions and alarmist nonsense. That reaction is not unfamiliar to us today. It is lifted from the same playbook that is still in use, and the same strategy is being deployed against anyone who criticizes the grand designs of central planners or warns against the obvious consequences of their reckless policies and short-sighted fixes to long-term economic and monetary problems.
Read the original post:
50 Years Since The Closure Of The 'Gold Window' (Part I) - OpEd - Eurasia Review
- That Day I Interviewed Ayn Rand - Foundation for Economic Education - March 2nd, 2024 [March 2nd, 2024]
- Ayn Rand's Anthem Was Adapted Into a Graphic Novel, and Its Timing Couldn't Be Better | Maeve Ronan - Foundation for Economic Education - February 16th, 2024 [February 16th, 2024]
- Real World Economics: Ayn Rand and the Grand Canyon - St. Paul Pioneer Press - February 1st, 2024 [February 1st, 2024]
- Tech Entrepreneur Elle Morrill Offers Inspirational Life Advice in ARI Roundtable - New Ideal - February 1st, 2024 [February 1st, 2024]
- America needs to clean up its act | News, Sports, Jobs - Alpena News - August 26th, 2023 [August 26th, 2023]
- How immigration creates a more prosperous world - Learn Liberty - August 26th, 2023 [August 26th, 2023]
- Yad Vashem tour by Israel Heritage Foundation visibly moves ... - JNS.org - August 26th, 2023 [August 26th, 2023]
- Anna May Wong and Chinatown Noir: 4 Essential Films - CrimeReads - August 26th, 2023 [August 26th, 2023]
- Ditch your business books and pick up these three novels for a fresh ... - ETHRWorld Middle East - August 26th, 2023 [August 26th, 2023]
- Your Guide to the Rory Gilmore Reading Challenge - The Everygirl - August 26th, 2023 [August 26th, 2023]
- BioShock 4 May Have an Edge Compared to Other Modern FPS ... - GameRant - June 2nd, 2023 [June 2nd, 2023]
- LETTER: When will Republicans wake up? - The Pantagraph - June 2nd, 2023 [June 2nd, 2023]
- 'The Marvelous Mrs. Maisel' Celebrated Selfishness as a Virtue - Reason - June 2nd, 2023 [June 2nd, 2023]
- Blaming the Victim - CounterPunch.org - CounterPunch - June 2nd, 2023 [June 2nd, 2023]
- Coalition of AI leaders sees 'societal-scale risks' from the ... - SiliconANGLE News - June 2nd, 2023 [June 2nd, 2023]
- Fall 2023 Adult Announcements: Literary Fiction - Publishers Weekly - June 2nd, 2023 [June 2nd, 2023]
- 20 Box Office Bombs That Got Sequels - MovieWeb - June 2nd, 2023 [June 2nd, 2023]
- Religious Skeptics Should Question Their Moral Theology - New Ideal - May 18th, 2023 [May 18th, 2023]
- What Ayn Rand Understood about Romantic Love That so Many Fail ... - Foundation for Economic Education - May 18th, 2023 [May 18th, 2023]
- 1923 Emmy Submissions Revealed for Harrison Ford, Helen Mirren and More (EXCLUSIVE) - Variety - May 18th, 2023 [May 18th, 2023]
- Column: This is what happens when you take Ayn Rand seriously - April 10th, 2023 [April 10th, 2023]
- How Ayn Rand, Emerson and Thoreau perverted the American Dream - April 10th, 2023 [April 10th, 2023]
- Ayn Rand - Books, Quotes & Philosophy - Biography - February 18th, 2023 [February 18th, 2023]
- EDITORIAL: Remembering the great Ayn Rand, a champion of capitalism and ... - February 5th, 2023 [February 5th, 2023]
- The curious cult of the friend of fascism | Anthony Daniels - The Critic - October 17th, 2022 [October 17th, 2022]
- Ocean City 'Jeopardy!' champion wins almost $60,000 in 7th consecutive win, over $220,000 total - Press of Atlantic City - October 17th, 2022 [October 17th, 2022]
- Will Amanda Seyfried (The Dropout) ride her Emmy high all the way to a SAG Award win? - Gold Derby - October 6th, 2022 [October 6th, 2022]
- Books review: What to read in October - Reader's Digest - October 6th, 2022 [October 6th, 2022]
- Democrats dig the graves of freedom and prosperity - Washington Times - October 6th, 2022 [October 6th, 2022]
- Baseball and Yom Kippur: Is there a Koufax curse? - Forward - October 6th, 2022 [October 6th, 2022]
- The limits of Justice Ketanji Brown Jacksons power - Fortune - October 6th, 2022 [October 6th, 2022]
- Race Across The World and Louis Theroux Interviews among new BBC Factual and Arts slate - Royal Television Society | - October 6th, 2022 [October 6th, 2022]
- Fool Britannia: sloppy Tory treatise a hint of horrible things to come - Crikey - October 6th, 2022 [October 6th, 2022]
- Day one at the Tory conference: Industry cries out for stability but U-turns and uncertainty continue - Building - October 6th, 2022 [October 6th, 2022]
- Former Capitol Police Chief Steven A. Sund Set To Publish A New Book About The Attack On January 6th With Explosive Never-Before-Revealed Information... - September 27th, 2022 [September 27th, 2022]
- Right place at the right time: freeports model gives fillip to St Helens regeneration scheme - The Guardian - September 27th, 2022 [September 27th, 2022]
- Reflections from London on the queen's life and death - Baptist News Global - September 27th, 2022 [September 27th, 2022]
- Editorial: NH voters, beware of radical threat on ballot - Valley News - September 11th, 2022 [September 11th, 2022]
- 10 Wednesday AM Reads - The Big Picture - Barry Ritholtz - September 11th, 2022 [September 11th, 2022]
- Opinion: Renewables are great and all, but who'll pay when they fail? - Houston Chronicle - September 11th, 2022 [September 11th, 2022]
- The Simpsons' Playdate With Destiny Short Was A Product Of Serendipity - /Film - August 27th, 2022 [August 27th, 2022]
- Filthy Animals Pries Open The Violent, Animalistic Notions In Human Relationships - Gaysi - August 27th, 2022 [August 27th, 2022]
- How Isabel Paterson Helped Ayn Rand Find Atlantis - The Objective Standard - August 25th, 2022 [August 25th, 2022]
- Where Is 'The Anarchists' Star Jason Henza Today? - Newsweek - August 25th, 2022 [August 25th, 2022]
- Objectivism Q&A with Ben Bayer and Dan Schwartz - New Ideal - August 2nd, 2022 [August 2nd, 2022]
- Book Banning Is Wrong Unless It Gets Me Out of Helping My Kid With His Homework - The Hard Times - August 2nd, 2022 [August 2nd, 2022]
- THE TEACHER'S DESK: Breaking the Rules | Opinion | thetimestribune.com - Times Tribune of Corbin - July 21st, 2022 [July 21st, 2022]
- If Big Ten didnt just add lucrative programs like USC but trimmed stragglers, whod get the boot? | Jones - PennLive - July 21st, 2022 [July 21st, 2022]
- A high point of our time in southern Alberta, Canada - Patheos - July 21st, 2022 [July 21st, 2022]
- The Banality of Putin and Xi - New Ideal - June 30th, 2022 [June 30th, 2022]
- 4 Pillars of The Illusion | C. Don Jones - Patheos - June 30th, 2022 [June 30th, 2022]
- The Philosophic Case for the Absolute Right to Abortion - New Ideal - June 26th, 2022 [June 26th, 2022]
- R2AK: Will monohulls sweep the podium? - Scuttlebutt Sailing News - June 26th, 2022 [June 26th, 2022]
- Bill Maher Addressed an Eventful Political Week on Real Time - InsideHook - June 26th, 2022 [June 26th, 2022]
- Ayn Rand v Donald Trump? - Daily Kos - June 22nd, 2022 [June 22nd, 2022]
- Letter: The rules of life are very simple - Detroit Lakes Tribune - June 22nd, 2022 [June 22nd, 2022]
- The Banality of Putin and Xi | Yaron Brook and Elan Journo - IAI - June 22nd, 2022 [June 22nd, 2022]
- American culture is destroying itself, and the planet, says leading activist Bill McKibben - Yahoo Philippines News - June 22nd, 2022 [June 22nd, 2022]
- Is Discussing the Consequences of Anti-Vaccine Disinformation Fun? - Science Based Medicine - June 3rd, 2022 [June 3rd, 2022]
- O'Donnell: Will the NBA's new red-light camera calls ruin The Finals for ABC/ESPN? - Daily Herald - June 1st, 2022 [June 1st, 2022]
- The Strange and Terrifying Ideas of Neoreactionaries Current Affairs - Current Affairs - June 1st, 2022 [June 1st, 2022]
- Martin Scorsese, Objectivism, Relativism, and How We Read Cinema - No Film School - June 1st, 2022 [June 1st, 2022]
- Ayn Rand, Objectivists, and COVID - Science Based Medicine - May 25th, 2022 [May 25th, 2022]
- Ayn Rand vs. Classical Economists - The Objective Standard - May 25th, 2022 [May 25th, 2022]
- Opinion | Demolishing the Demonic Plans of Our Enemy, and Can We Get An Amen - Common Dreams - May 20th, 2022 [May 20th, 2022]
- Ayn Rand's We the Living: Back on the Silver Screenand Better Than Ever - The Objective Standard - May 17th, 2022 [May 17th, 2022]
- Congress revival: Time to break free of family - The Hans India - May 17th, 2022 [May 17th, 2022]
- The Financial Dark Ages Are Ending Thanks To Bitcoin - Bitcoin Magazine - May 17th, 2022 [May 17th, 2022]
- Marital rape: How understanding context rather than just focusing on consent will help resolve the issue - Firstpost - May 13th, 2022 [May 13th, 2022]
- Deadly Class Season 2: Is a Release Date or Rumor in the Offing on Netflix? - Federal Regulations Advisor - May 13th, 2022 [May 13th, 2022]
- The Daily Cartoon and Live Briefing: Monday, May 9, 2022 - FlaglerLive.com - May 13th, 2022 [May 13th, 2022]
- Victory at San Jacinto liberated the individual | Opinion | jacksonvilleprogress.com - Jacksonville Daily Progress - April 20th, 2022 [April 20th, 2022]
- RUSH's GEDDY LEE Says NEIL PEART 'Didn't Want Anyone To Know' About His Illness: 'He Wanted To Keep It In The House' - BLABBERMOUTH.NET - April 20th, 2022 [April 20th, 2022]
- The Alternative Meat Industry Wants Solar Power Style Mandates And Subsidies - Science 2.0 - April 20th, 2022 [April 20th, 2022]
- diSConnected: Is Ayn Rand or Mother Teresa better for protecting South Carolinians with disabilities? - South Carolina Public Radio - April 15th, 2022 [April 15th, 2022]
- Did the John Birch Society Win in the End? - The Bulwark - April 15th, 2022 [April 15th, 2022]
- Boris Johnsons Covid bravado insults the NHS and the public - The Guardian - April 15th, 2022 [April 15th, 2022]
- Science Fiction in a Time of Crisis - Filmmaker Magazine - April 15th, 2022 [April 15th, 2022]
- The criticism facing Rishi Sunak has nothing to do with race, and all to do with greed - iNews - April 15th, 2022 [April 15th, 2022]
- Zack Snyder's Star Wars-Themed Movie Recruits The Princess Bride Star - Giant Freakin Robot - April 11th, 2022 [April 11th, 2022]