Up until that point, foreign central banks could redeem US dollars directly with the US Treasury in exchange for gold. And, recognizing that the US was essentially bankrupt, foreign central banks, especially France, began to demand gold instead of the dollar.
And then, on August 15, 1971, Richard “I’m Not A Crook” Nixon announced the
He announced that due to the shadowy and intangible “money speculators” he would “defend” the dollar by removing its convertibility into gold “temporarily”.
It was, unquestionably, the most destructive event in modern monetary history… yet hardly anyone remembers it or knows about it.
Prior to 1971, the US government and Federal Reserve were restricted in the amount of debt they could go into and the amount of money it could print.
Afterwards, everything changed.
When discussing how massive of an event it was I often show long term historical charts on the market and the economy. Notice, EVERYTHING changed in 1971… and not for the better.