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The Nixon shock was the effect of a series of economic measures, including wage and price freezes, surcharges on imports, and the unilateral cancellation of the direct international convertibility of the United States dollar to gold, taken by United States president Richard Nixon on 15 August 1971 in response to increasing inflation. [1] [2]
The 1934 Gold Reserve Act subsequently changed the statutory gold content of the U.S. Dollar from $20.67 to $35 an ounce. While this might be seen to some as a move that increased the value of gold, it actually merely devalued the U.S. Dollar so that less gold was required to back U.S. Currency, and the Federal Reserve was free to print more ...
Once off the gold standard, it became free to engage in such money creation. The gold standard limited the flexibility of the central banks' monetary policy by limiting their ability to expand the money supply. In the US, the central bank was required by the Federal Reserve Act (1913) to have gold backing 40% of its demand notes. [66]
The gold standard is a monetary system in which gold is used to guarantee the value of a country’s currency. It was a typical measure in the 20th century to ensure that a country’s money was ...
This change led to more conversion of gold into dollars, allowing the U.S. to effectively corner the world gold market. [15] [16] The suspension of the gold standard was considered temporary by many in markets and in the government at the time, but restoring the standard was considered a low priority to dealing with other issues. [12] [15]
On August 8, 1974, Richard Nixon, the 37th President of the United States, announced his resignation. In a television address from the Oval Office, Nixon said: %shareLinks-quote="By taking this ...
He then announced temporary wage and price controls, allowed the dollar to float against other currencies, and ended the convertibility of the dollar into gold. [62] Nixon's monetary policies effectively took the United States off the gold standard and brought an end to the Bretton Woods system, a post-war international fixed exchange-rate system.
Today's Highlights in History: On June 23, 1972, President Richard Nixon and White House chief of staff H.R. Haldeman discussed using the CIA to obstruct the FBI's Watergate investigation.