Excerpt

"Let me lay to rest the bugaboo of what is called devaluation," Richard Nixon told his fellow Americans on Aug. 15, 1971.

The 37th president had just announced the U.S. would "temporarily" close the gold window — ending the convertibility of dollars into gold that had been key to the postwar Bretton Woods system.

What didn't change in 1971, though, was every bit as important as what did. Because the dollar remained the world's reserve currency — a "privilege" that, four decades on, looks increasingly like a curse.

When he made his address, Nixon was keen to allay fears he was undermining the dollar's value by cutting the link to gold — especially given the apocalyptic warnings (both in the press and inside the White House) of how disastrous such a move would be.

His pitch? "If you want to buy a foreign car or take a trip abroad, market conditions may cause your dollar to buy slightly less. But if you are among the overwhelming majority of Americans who buy American-made products in America, your dollar will be worth just as much tomorrow as it is today. The effect of this action, in other words, will be to stabilize the dollar."

Any astute viewer that day would have found it eerily reminiscent of British prime minister Harold Wilson's "Pound in your Pocket" speech four years earlier. Nothing would change besides the entire monetary structure. And now, back to your scheduled programming with Bonanza.

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http://lfb.org/today/what-didnt-change-when-nixon-cut-the-gold-link/