When Did The Us Go Off The Gold Standard ?
The US went off the gold standard in the year 1971. In the previous year, the US was saddled by growing expenditure on the Vietnam War and huge trade deficit. This prompted the country to print more paper money. The other countries began wondering whether the US had the ability to cover the entire currency circulation by gold. And, this caused the US to go off the gold standard. |
However, the US was not the first country to stop using the gold standard. Rather, it was West Germany. Once this happened, other countries too decided to leave the gold standard as they were worried that the dollar would lose value and they would end up losing their investment in the US dollar. So, these countries more or less forced the US to let go of the gold standard. (See Reference 1)
It is believed that Richard Nixon decided to go off the gold standard primarily to save the country from facing an economical meltdown. (See Reference 1)
When gold is used as a standard for regulating and maintaining a particular currency, then that currency becomes strong, as gold is a much sought after precious metal all over the world. In principle, when the gold standard was used to back the US dollar, it could be exchanged in a bank for equivalent value of gold. Hence, this resulted in the US dollar becoming one of the most robust currencies in the world. (See Reference 1)
The gold standard started in the 1900 when the Gold Standard Act was passed by the US Congress. This resulted in the valuing of the currency on the basis of gold. However, in the year 1933, private ownership of gold could only be in the form of jewelry and this ban was imposed by the then US president, Franklin Roosevelt. (See Reference 1)
Then, in the year 1946, the Bretton Woods System was passed by the US. This allowed other countries to sell their gold to the US for a fixed price. The price was set at $35 for each troy ounce. However, when the use of gold standard ended in the year 1971, the Bretton Woods System came to an end and the linkage of currencies with commodities also came to an end. (See Reference 1)
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When Did The Us Go Off The Gold Standard
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