Nixon Ends Dollar Convertibility to Gold
The 1971 suspension accelerated the collapse of Bretton Woods but did not alone cause later inflation.
In August 1971, President Richard Nixon suspended the US dollar's convertibility into gold for foreign official holders. The move responded to pressure on the Bretton Woods system, including imbalances and declining confidence in the dollar's gold peg.
The decision helped end the postwar fixed exchange-rate system and contributed to a shift toward floating currencies. It did not simply give governments unlimited permission to print money, nor did it alone cause structural inflation; fiscal policy, oil shocks, wage dynamics, and central-bank choices mattered.
Maintaining gold convertibility might have constrained some monetary responses, but could also have forced abrupt adjustment, deflation, or exchange controls. The alternative's effects depend on how governments and markets responded to a weakening system.
A monetary rule distributes power and risk across governments, workers, savers, borrowers, and trading partners. Its credibility depends on economic conditions as well as the political choices made to defend it.
When I favor a strict economic rule, whose hardship might enforcing it create and who gets to decide?