The Dollar Anniversary
by Charles Goyette
Much has been made of this week’s 40th anniversary of Richard Nixon’s resignation from the presidency. But while politicians come and go, it is their policies that live after them.
Friday is another Nixon anniversary. It marks 43 years since Nixon announced a major policy, one that continues to play out today and is now hastening to an unhappy conclusion.
It was on Aug. 15, 1971, that Nixon severed the last remaining link of the U.S. dollar to gold.
Oh, to be sure, it was only “temporary,” explained the President.
That was 43 years ago….
Abandoning the gold standard was effectively a devaluation of the dollar. “If you want to buy a foreign car or take a trip abroad, market conditions may cause your dollar to buy slightly less. But if you are among the overwhelming majority of Americans who buy American-made products in America, your dollar will be worth just as much tomorrow as it is today,” Nixon lied.
As he spoke he knew that the dollar would not be worth “as much tomorrow,” which is why he also announced a strict program of wage and price controls that night.
It was a ham-handed attempt to hide what was being done to the dollar’s purchasing power, freezing prices by governmental edict.
– More at MoneyandMarkets.com.