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The premise was that each dollar was backed by a fixed amount of gold. The only problem was: there was no way to audit how much gold the US had. So when it bec
by 29athrowaway 5y ago
The premise was that each dollar was backed by a fixed amount of gold. The only problem was: there was no way to audit how much gold the US had.
So when it became clear that the US was spending too much, France announced they wanted to cash out their gold and the US responded by suspending convertibility of dollars into gold (the Nixon shock).
Since then the US has a floating value instead of a fixed precious metal-based exchange rate.
- deleted 5y ago[deleted]
- lotsofpulp 5y agoI do not see what that has to do with my question. The fact that it costs a country nothing (or near nothing) to make its own currency and that another country has to pay face value for it seems like a trivial truth. What was different between 1945-1971 and after 1971?