The Time the United States Ran Out of Money
Principles by Ray Dalioยท2025-11-11 20:06
Historical Context & Monetary Policy Shift - In 1971, the US defaulted on its debts due to insufficient gold reserves to back its paper currency [1][2][3] - President Nixon suspended the convertibility of the dollar into gold to defend the dollar against speculators [5] - Breaking the link to gold allowed the US to print more money, leading to a devaluation of the dollar [9] - A similar event occurred in 1933 under President Roosevelt, who also broke the link between paper dollars and gold [7][8] Market Reaction & Economic Impact - Contrary to expectations, the stock market rose nearly 25% after the dollar devaluation in 1971 [6] - The strength of a nation's currency is based on the strength of that nation's economy [4]