The History of Government Monetary Intervention

Read this section on the West's monetary breakdown by Murray Rothbard. Are the monetary standards we live under today the result of free voluntary choice? If not, what were the government monetary interventions along the way?

The Monetary Breakdown of the West

Phase VII: The End of Bretton Woods: Fluctuating Fiat currencies, August-December, 1971

On August 15, 1971, at the same time that President Nixon imposed a price-wage freeze in a vain attempt to check bounding inflation, Mr. Nixon also brought the post-war Bretton Woods system to a crashing end. As European Central Banks at last threatened to redeem much of their swollen stock of dollars for gold, President Nixon went totally off gold. For the first time in American history, the dollar was totally fiat, totally without backing in gold. Even the tenuous link with gold maintained since 1933 was now severed. The world was plunged into the fiat system of the thirties – and worse, since now even the dollar was no longer linked to gold. Ahead loomed the dread specter of currency blocs, competing devaluations, economic warfare, and the breakdown of international trade and investment, with the worldwide depression that would then ensue.

What to do? Attempting to restore an international monetary order lacking a link to gold, the United States led the world into the Smithsonian Agreement on December 18, 1971.