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How Did Nixon Shock Change The Whole World

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The United States proved to be one of the strongest and most influential countries in the world. But as any other country, it went through some difficult times, economical break downs, market crashes, wars, natural and technological disasters. There were also some events that dramatically changed the economical path of not only United States, but the whole world. One of such events was a “Nixon Shock” in 1971, the decision to break Bretton Woods agreement and close the Gold Window, meaning to break the last connections with Gold Standard. The consequences of this act completely changed the monetary system around the world. This event “gave birth” to Fiat Money system, the system we use today.
Even though, for people of the United States, convertibility …show more content…

“On Tuesday, 10 August, Volcker and Shultz met and agreed that the United States had to act soon or else foreign central banks might begin demanding gold in exchange for the dollars that they were holding.” At that time, the president of the United States was Richard Nixon. Understanding the urgency and the scale of the problem, Nixon made a brave move, on August 15 he broke Bretton Woods agreement, suspended a dollar from gold. This decision was shocking not only for people of the United States, but for the whole world. Here is how Nixon presented it to the people on television: “Prosperity without war requires action on three fronts: We must create more and better jobs; we must stop the rise in the cost of living; we must protect the dollar from the attacks of international money speculators.” It was followed by Executive Order 11615. People of the United States welcomed such changes as majority were more conscious about jobs, price freeze and cost of living rather that devaluation of a dollar. This decision supposed to be temporary, until the tension resolves and economy stabilizes. Surprisingly, countries adopted the floating money system very fast and relatively painlessly, Gold Standard was never

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