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It's called the Nixon Shock - https://en.wikipedia.org/wiki/Nixon_shock https://en.wikipedia.org/wiki/Nixon_shock It ultimately led to the abolishment of the B

It's called the Nixon Shock - https://en.wikipedia.org/wiki/Nixon_shock https://en.wikipedia.org/wiki/Nixon_shock It ultimately led to the abolishment of the Bretton Woods International Monetary System which in turn led to the Oil Shock of 1973-1974 which in turn led to a prolonged period of high inflation in the United States (Americans from the late 70s would have loved Biden's inflation!) Ronald Reagan "solved" the problem via massive tax breaks that resulted in profligate deficits, deficits which have continued nearly every year since to this day and via moving American manufacturing overseas. It's unfortunate because Federal Reserve Chairman Paul Volcker had done and amazing job in reducing US inflation from 14% (!) in 1980 to 3% in 1983. The nascent neocons essentially pushed him out as Chairman and the rest, as they say, is history. Anyway, what people are going to be asking 50 years from now is WTF happened in 2025? I'm fully expecting there's going to be a Trump Shock that has even longer-lasting impacts.

JumpCrisscross 2y ago
> which in turn led to the Oil Shock of 1973-1974 The Nixon Shock caused the Yom Kippur War that sparked OPEC's embargo of America [1]? [1] https://en.wikipedia.org/wiki/1973_oil_crisis https://en.wikipedia.org/wiki/1973_oil_crisis
- taylodl 2y ago
  > The Nixon Shock caused the Yom Kippur War that sparked OPEC's embargo of America [1]? Absolutely. The Yom Kippur war was the straw that broke the camel's back, but the Nixon Shock was the force supplying the tension. The Nixon Shock sent the value of the US dollar in significant decline (high inflation), which was the currency being used to buy OPEC oil. From OPEC's perspective they were facing declining revenues due to dollar inflation and were suspicious the Western nations were manipulating the global economy to their advantage. The Yom Kippur war brought everything to a head since it was those same Western nations who were supporting Israel. OPEC decided they'd had enough.
  - JumpCrisscross 2y ago
    > the Nixon Shock was the force supplying the tension More than the aftermath of the 1967 Six-Day War? > From OPEC's perspective they were facing declining revenues due to dollar inflation The real price of oil declined from 1948 until July 1973 [1]. You'd be hard pressed to find the Nixon shock on the international price of oil; it monotonically declined from January 2021 until July 1973. Bretton Woods ended on 15 August 1971; on 17 October 1973 OPEC embargoed the U.S. > OPEC decided they'd had enough OPEC cut production in 1973 and raised prices on everyone. They kept pricing their oil in dollars and selling it for dollars because this wasn't a dispute about dollars or Bretton Woods, it was a dispute over Israel between King Faisal and Nixon. [1] https://www.macrotrends.net/1369/crude-oil-price-history-chart https://www.macrotrends.net/1369/crude-oil-price-history-cha...
    - taylodl 2y ago
      > More than the aftermath of the 1967 Six-Day War? Yes. Those were Egypt and Syria's concern, not OPEC's. > You'd be hard pressed to find the Nixon shock on the international price of oil BINGO! That's the problem. The US dollar was tanking due to the Nixon Shock. OPEC was getting paid with ever more worthless pieces of paper. OPEC already had soured relations with the West due to the Nixon Shock and believed they weren't being compensated fairly for their product, due to how the oil market was structured at that time. The West's support of Israel during the Yom Kippur War simply proved to be too much. OPEC retaliated to these events with the Oil Embargo, which completely altered the oil market from then on and gave OPEC much greater financial power, and money. At the end of the day, the Oil Embargo was mostly about money, solving a money crises created by the Nixon Shock. Its resolution resulted in OPEC getting more money. Let me put it this way, if there had been no Nixon Shock, would the Yom Kippur War in and of itself have caused the Oil Embargo? Probably not. The Oil Embargo wasn't about ideology, it was about money. That's why the always say to follow the money.
      - dan-robertson 2y ago
        Real prices, which account for inflation, do not show the Nixon shock. Maybe you think the nominal prices should be adjusted some other way to show the Nixon shock?

JumpCrisscross 2y ago

> which in turn led to the Oil Shock of 1973-1974 The Nixon Shock caused the Yom Kippur War that sparked OPEC's embargo of America [1]? [1] https://en.wikipedia.org/wiki/1973_oil_crisis https://en.wikipedia.org/wiki/1973_oil_crisis

taylodl 2y ago
> The Nixon Shock caused the Yom Kippur War that sparked OPEC's embargo of America [1]? Absolutely. The Yom Kippur war was the straw that broke the camel's back, but the Nixon Shock was the force supplying the tension. The Nixon Shock sent the value of the US dollar in significant decline (high inflation), which was the currency being used to buy OPEC oil. From OPEC's perspective they were facing declining revenues due to dollar inflation and were suspicious the Western nations were manipulating the global economy to their advantage. The Yom Kippur war brought everything to a head since it was those same Western nations who were supporting Israel. OPEC decided they'd had enough.
- JumpCrisscross 2y ago
  > the Nixon Shock was the force supplying the tension More than the aftermath of the 1967 Six-Day War? > From OPEC's perspective they were facing declining revenues due to dollar inflation The real price of oil declined from 1948 until July 1973 [1]. You'd be hard pressed to find the Nixon shock on the international price of oil; it monotonically declined from January 2021 until July 1973. Bretton Woods ended on 15 August 1971; on 17 October 1973 OPEC embargoed the U.S. > OPEC decided they'd had enough OPEC cut production in 1973 and raised prices on everyone. They kept pricing their oil in dollars and selling it for dollars because this wasn't a dispute about dollars or Bretton Woods, it was a dispute over Israel between King Faisal and Nixon. [1] https://www.macrotrends.net/1369/crude-oil-price-history-chart https://www.macrotrends.net/1369/crude-oil-price-history-cha...
  - taylodl 2y ago
    > More than the aftermath of the 1967 Six-Day War? Yes. Those were Egypt and Syria's concern, not OPEC's. > You'd be hard pressed to find the Nixon shock on the international price of oil BINGO! That's the problem. The US dollar was tanking due to the Nixon Shock. OPEC was getting paid with ever more worthless pieces of paper. OPEC already had soured relations with the West due to the Nixon Shock and believed they weren't being compensated fairly for their product, due to how the oil market was structured at that time. The West's support of Israel during the Yom Kippur War simply proved to be too much. OPEC retaliated to these events with the Oil Embargo, which completely altered the oil market from then on and gave OPEC much greater financial power, and money. At the end of the day, the Oil Embargo was mostly about money, solving a money crises created by the Nixon Shock. Its resolution resulted in OPEC getting more money. Let me put it this way, if there had been no Nixon Shock, would the Yom Kippur War in and of itself have caused the Oil Embargo? Probably not. The Oil Embargo wasn't about ideology, it was about money. That's why the always say to follow the money.
    - dan-robertson 2y ago
      Real prices, which account for inflation, do not show the Nixon shock. Maybe you think the nominal prices should be adjusted some other way to show the Nixon shock?