RE: Nixon and the gold standard
While Richard Nixon is broadly blamed for the elimination of the convertibility of U.S. dollars into gold it was, in reality, a privilege only enjoyed by foreign central banks. (It had been illegal for American citizens to hold gold since the 1930s due to legislation passed by the Roosevelt Administration.) These overseas institutions had the ability to convert their trade surpluses, if they had them, from U.S. dollars into gold. As the U.S. ran an overheated economy in the mid- to late-1960s, due to the “guns and butter” policies of Lyndon Johnson, America’s trade deficits soared relative to other countries. It became clear there wasn’t enough gold in Fort Knox, and other repositories, to satisfy its trading partners should enough of them demand actual bullion. France was the country that called America’s bluff, forcing Nixon either to endure a politically painful recession — that would have been caused by the necessary high interest rates to defend the dollar — or close the gold window. Like almost all politicians, especially these days, he took the politically expedient route, one that would lead to a persistent and dramatic 50-year loss of the dollar’s purchasing power.