On August 15, 1971, President Nixon announced on TV 3 dramatic changes in economic policy.
He ends the Bretton Woods international monetary system.
He imposes a temporary tax on all imports.
This was one of the most important decisions in modern financial, economic and monetary history.
Key Economic Facts:
Under the gold standard, a government is limited -- both legally and practically -- as to how much paper money it can print. As recently as the Lyndon Johnson administration, the U.S. could print paper dollars equal only to four times the value of the nation's gold reserves.
Closing the gold window -- is a euphemism for the U.S. defaulting on its promise to other countries to redeem dollars for gold.
In effect, it's a one hundred percent devaluation, a -- de facto -- default on the promise to redeem.
The current world monetary system assigns no special role to gold; indeed, the Federal Reserve is not obliged to tie the dollar to anything. It can print as much or as little money as it deems appropriate.
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The Bretton Woods system