Nixon shock ends gold convertibility and ushers in 1970s stagflation
- Date
- 15 August 1971
- Category
- Economy & trade
- Region
- Global
- Era
- Contemporary
- Significance
On 15 August 1971 President Richard Nixon announced a 'New Economic Policy' that suspended the convertibility of the US dollar into gold, alongside a 90-day wage and price freeze and a temporary import surcharge.
The move, known as the Nixon shock, was a response to mounting US trade deficits, inflation and dwindling gold reserves, and it effectively ended the fixed-exchange-rate Bretton Woods system established in 1944. Within a few years the major economies shifted to floating exchange rates, the framework formalised by the 1976 Jamaica Accords. The breakdown coincided with a turbulent economic decade: the 1973 OPEC oil embargo, triggered during the Arab-Israeli Yom Kippur War, quadrupled crude prices and, together with a second shock in 1979, produced 'stagflation' the unusual combination of high inflation, slow growth and elevated unemployment that challenged prevailing Keynesian policy. These events reshaped global finance and macroeconomic thinking, paving the way for monetarism, central-bank inflation-fighting, and the deregulatory turn of the 1980s.
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Empires active in 15 August 1971
- Soviet Union1922 CE – 1991 CE
- British Empire1583 CE – 1997 CE
- Spanish Empire1492 CE – 1976 CE
- Portuguese Empire1415 CE – 1999 CE
- Solomonic dynasty1270 CE – 1974 CE
- Dutch Empire1581 CE – 1975 CE
Related economy & trade events
- The global financial crisis and the collapse of Lehman Brothers15 September 2008
- Founding of the World Trade Organization1 January 1995
- Xi Jinping launches the Belt and Road Initiative7 September 2013
- The US-China trade war begins6 July 2018
- The global inflation surge2021–2023 (peak June 2022)
- China's Reform and Opening-Up Begins Under Deng XiaopingDecember 18, 1978
Further reading
The wider story
The Silk Roads: A New History of the World
Best-selling world history told through the trade routes that moved goods, faiths and ideas.
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