Then in 1971, President Nixon took the United States off the gold standard.
Now I'm too young to remember Britain coming off the gold standard or even the devaluation of 1967, but I do remember the ERM crisis.
Furthermore, there has never been a secular inflation of the kind we have experienced since the U.S. went off the gold standard under a gold standard.
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Correctly sensing that Fort Knox would quickly run out of gold, on Aug. 15, 1971, Nixon took us off the gold standard, and the inflationary '70s began.
By going off the gold standard and allowing their currencies to fluctuate, they protected the interests of the bulk of their populations at the expense of creditors.
In 1935 the economy was recovering by now America was off the gold standard and the money supply was expanding again but unemployment stayed up, partly because of the New Deal.
The big switch to the foundation of the American financial structure at the advent of this period was the U.S. decision in 1971 to go off the gold standard.
The currency war in the 1930s was facilitated by many countries going off the gold standard, as they tried to revive their economies by lowering the value of their currencies.
What it actually did was come off the gold standard, thus devaluing the currency by some 25% (deserately needed for Churchill had rejoined it at much too high a rate years earlier) and cut government spending at the same time.
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In 1931, as the Austrian bank Creditanstalt collapsed, pulling down the banks of Germany, Czechoslovakia, Hungary and Poland, a run on the German currency forced it off the Gold Standard in May, then the British Labour government struggled to maintain its currency peg - imposing austerity onto its own voters as the price.
The dollar has fallen in value by more than 80% from the day when Richard Nixon took the world off the tattered remnants of the gold standard.
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Finished off as it was by the callous executive order of a U.S. president, the gold standard cannot be resurrected the same way.
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