Are we are nearing another monetary reset to match President Richard Nixon’s closure of the gold window?
Nixon’s TV address on 15 August 1971 was the ultimate reaction to the cumulative 1965-71 loss of half of America’s gold holdings. By presidential fiat, Nixon dismembered the post-war monetary and financial order set up at Bretton Woods in 1944 with the dollar as its pivot.
As the condition for this ‘exorbitant privilege’, America had to promise countries would always be allowed to exchange surplus dollars for gold. Breaking point came in early August. President Georges Pompidou sent a French naval ship to Manhattan docks to exchange $191m for gold, stored at the New York Federal Reserve Bank, and bring it to the Banque de France.
Half a century later, we are at another turning point. Demands are multiplying for a reshaping of the economic system, and the institutions at…