On August 15 1971, President Richard Nixon interrupted an episode of Bonanza to announce “a new economic policy” to American families gathered in front of their television sets that Sunday evening. Among the myriad measures the president outlined was a 10 per cent import tariff — and the suspension of the US dollar’s convertibility into gold.
Nixon himself was more worried about the political backlash from Americans expecting to spend their evening with the Cartwright family at Ponderosa Ranch than the nefarious “international money speculators” his announcement targeted. Yet the consequences were enormous. Although couched as a temporary measure, the US would never again return to the so-called gold standard.
What became known as the “Nixon shock” marked the end of one financial era and the beginning of a new one. The global monetary framework thrashed out at the Mount Washington Hotel in New Hampshire’s Bretton Woods in 1944 — with the gold-backed US dollar as the Sun around which every other currency circled — was dead.