The End of the Bretton Woods System | On This Day

On this day, August 15th, 1971, US President Richard Nixon pitched to the nation a firehose of economic policy changes designed to combat an economic winter that has seen inflation triple over two years. The unemployment rate spike above 6%, and a balance of payments surplus reverse to a soaring deficit. Facing intense voter pressure to avoid another recession.
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[ctrl-shift-run]

And that's how we got this monopoly money system.

[drscopeify]

Linking money to Gold was sensible when the world financial system was irresponsible and when Banks set their own rates. But with the centralization of rate setting from the banks to the Central Banks and the more robust systems of maintaining a Fiat currancy and trading global currencies against each other has turned out to be decently stable. It is not as stable as it was before but it is fairly stable for a much large global population and wildly different economies all working together.

The USA and much of the world had a baby boom after the end of WW2 resulting in higher demand for goods and services, with lack of global migration of people at the time, many countries population wanting a better future with higher education and office work, the factories ran out of cheap workers and began to unionize and demand higher pay while Baby Boomer demand for goods exploded = Massive inflation forces. The solution was to increase global trade, so that countries with large population and low consumption could make goods and export them to other countries, the first winners were Italy, Japan and Hong Kong who all jumped on the export market with huge success. The problem was with the link of Dollars to Gold it prevented the free flow of money and fair value forcing the system to collapse naturally.

[louistan]

Like the UK, Japan still thinks "colonialism" even as their empires have l9ng fallen to the Americans.

[milosnestorovic]

There are Bubble Economy now, only and Absolutely, Bubble Economy is a INEVITABLE complete now and today, it is clear and known complete....

[glennnielsen]

And an easy way, which few voters understand, to inflate away the national debt.

[DanH-uf]

The Bretton Woods system didn't really end for the US. The gold standard ended. The dollar is still the world's reserve currency despite all the BRICS and Yuan talk.

[amenemhurt]

So the president can put a moratorium to freeze consumer prices? Then why can't the current president do the same on ongoing inflation that literally cause havoc in family budget across the country??

[razjackson]

What came after is the lesser of two evils. Economies like Japan would never have been able to emerge if the dollar was still pegged to gold. BW didn't allow for fair valuation of currencies, which is an oversimplified, shorrtcut way of saying "unfair trade".