Nixon Broke With Gold 50 Years Ago. What Comes Next?
The global financial architecture is poised for another shift and, as usual, the U.S. will need to lead the way.
He didn’t mean to leave gold behind for good.
Photographer: National Archive/Newsmakers“Prosperity without war requires action on three fronts,” President Richard Nixon told America in a televised address 50 years ago today. “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.”
Then he administered what is now known as the “Nixon Shock”: He closed the “gold window.” Under the Bretton Woods Agreement, sealed at a hotel in Bretton Woods, New Hampshire, in 1944, the U.S. promised to convert into gold any dollars brought by other countries’ central banks at a rate of $35 per ounce. Other currencies traded at fixed exchange rates to the dollar. In effect, the entire Western financial system was pegged to gold, via the dollar.