To prevent losing it all, on 15 August 1971, Nixon told the world that they would no longer exchange foreign-held dollars for gold at that fixed price. In other words: no more gold for you from our vaults. Our dollars are now your problem. Non-American central banks suddenly had no alternative than to use dollars instead of gold as reserves to back the value of their currency. The dollar began to resemble an…IOU. After the so-called Nixon Shock, the global financial system was, effectively, backed by IOUs issued by a hegemon who could decide what the foreign IOU-holders could do with their
...more
