What Has Government Done to Our Money? The End of Bretton Woods: Fluctuating Fiat currencies, August-December, 1971
What Has Government Done to Our Money?
Murray N. Rothbard
IV.
The Monetary Breakdown of the West
7. Phase VII: The End of Bretton Woods: Fluctuating
Fiat currencies, August-December, 1971
On August 15, 1971, at the same time that President Nixon imposed
a price-wage freeze in a vain attempt to check bounding
inflation, Mr. Nixon also brought the post-war Bretton Woods
system to a crashing end. As European Central Banks at last
threatened to redeem much of their swollen stock of dollars for
gold, President Nixon went totally off gold. For the first time
in American history, the dollar was totally fiat, totally without
backing in gold. Even the tenuous link with gold maintained since
1933 was now severed. The world was plunged into the fiat system
of the thirties--and worse, since now even the dollar was no
longer linked to gold. Ahead loomed the dread spectre of currency
blocs, competing devaluations, economic warfare, and the
breakdown of international trade and investment, with the
worldwide depression that would then ensue.
What to do? Attempting to restore an international monetary order
lacking a link to gold, the United States led the world into the
Smithsonian Agreement on December 18, 1971.