Hello Bro & Sista,
While reading about world economic history, it turned out that there was one event that I thought was quite interesting, but was rarely discussed.
Date August 15, 1971United States President Richard Nixon announced that the US dollar could no longer be exchanged for gold. This decision became known as Nixon Shock.
At first glance it may sound like normal policy. But it turns out the impact is extraordinary.
Before 1971, the world financial system still used Gold Standardwhere the value of the currency is related to gold reserves. After the policy was implemented, the world slowly shifted to the system fiat moneynamely money whose value is based on trust in the government, no longer gold.
What makes me curious is that many economists are still debating this decision to this day.
Some argue that without the Nixon Shock, it would have been much more difficult for the world economy to develop because governments did not have the flexibility to deal with crises.
However, there are also those who think that since the world left the Gold Standard, inflation has become easier, national debt continues to increase, and people’s purchasing power is slowly decreasing.
So actually, was the Nixon Shock the solution… or the beginning of modern economic problems?
Out of curiosity, I finally looked for various references and summarized them into a documentary to make it easier to understand.
If anyone is interested in discussing the history behind this decision, the video can be watched here:
What do you think, bro & sista?
Would the world be better off with the current fiat money system, or should it return to the Gold Standard?
It is interesting if we discuss it from a historical and economic perspective. Who knows, maybe someone has a different reference or opinion.
