Summary
Wikipedia article on the Nixon Shock — the August 15, 1971 series of measures Nixon announced that ended dollar-gold convertibility and effectively terminated the Bretton Woods system. Comprehensive historical account with key dates, actors, and economic context.
Key Points
- August 15, 1971: Nixon suspended dollar convertibility to gold; imposed 90-day wage/price freeze; added 10% import surcharge.
- Immediate cause: By August 1971, only 10,000 metric tonnes of U.S. gold remained (half peak); France sent a ship to retrieve gold; Britain requested $3B in gold on August 11.
- Key actors at Camp David meeting (August 13): Nixon, Burns (Fed), Connally (Treasury), Volcker (Treasury Undersecretary).
- France’s Giscard d’Estaing had called the Bretton Woods system “America’s exorbitant privilege” — the ability to print money other nations had to accept.
- By 1973, floating exchange rates had fully replaced Bretton Woods.
- Bretton Woods (1944-1971): dollar pegged to gold at $35/oz; other currencies pegged to dollar; U.S. obligated to convert foreign dollar holdings to gold on demand.
- Post-WWII context: U.S. owned >50% of world’s official gold reserves at war’s end (574M oz).
- Vietnam War spending + Great Society fiscal expansion overextended the system.
Entities Mentioned
- Donald Trump — Nixon is the analog for Trump’s pressure on the Fed (Burns precedent)
- Jerome Powell — in the Arthur Burns comparison
Concepts Mentioned
- Nixon Shock — this is the primary source
- Fed Independence — Burns capitulated to Nixon; Volcker later restored independence
- Petrodollar System — developed in the wake of the Nixon Shock
- Strategic Bitcoin Reserve — Bitcoin as proposed return to hard money after Nixon’s fiat pivot
Notes
Wikipedia source — comprehensive and well-sourced (footnotes to primary historical records). Good reference for the specific timeline and direct quotes. The Eichengreen/Exorbitant Privilege quote is particularly useful for the dollar hegemony angle.