On a late-summer Friday the 13th in 1971, President Richard Nixon, the Federal Reserve chair Arthur Burns, the secretary of the Treasury John Connally and several other top U.S. officials climbed aboard a helicopter on the White House lawn. They were headed to the presidential retreat at Camp David to plan what another of the helicopter passengers, the budget director George Shultz, called “the biggest step in economic policy since the end of World War II.” That step was the end of the American commitment to redeem other countries’ dollars for gold at $35 an ounce, a bedrock of the Bretton Woods system of mostly fixed exchange rates that had been in place since 1944.
Nixon’s abandonment of the gold standard has indeed gone down in history as a major economic turning point. Some decry it as the beginning of an inflationist era of fiat money. Others see in it the dawn of a neoliberal age in which democratically elected governments ceded power to crisis-prone, inequality-spawning financial markets.
