By Thorsten Polleit – Mises Wire
On August 15, 1971, US president Richard Nixon declared that the US dollar would no longer be redeemable for gold. By doing so, the US administration effectively imposed a fiat money standard on the world that persists to this day.
John Exter, the former vice-president of the New York Federal Reserve, succinctly captures the consequence:
The paper dollar has become an “IOU nothing,” as have all paper currencies in the world today. As such, one “IOU nothing” currency has to trade in the marketplace every minute of every day against the “IOU nothings” of all the other central banks. We are in a world of irredeemable paper money—a state of affairs unprecedented in history.