Money Does Matter: The End of The Gold Standard Led to A Lower Standard of Living
The comments below are an edited and abridged synopsis of an article by André Marques
On August 15, 1971, President Nixon announced that the US dollar would no longer be redeemable in gold. This was supposed to be temporary yet, 51 years later, here we are. The gold standard was gradually destroyed in the 20th century. Now people are experiencing the consequences: Less purchasing power, more economic cycles, and a weaker economy.
The steps taken to end the gold standard are outlined in chapter 4 of What Has Government Done to Our Money? by Murray Rothbard, and Marques outlines them here: The Classical Gold Standard (1815-1914); The Gold Exchange Standard (1926-31); Fluctuating Fiat Currencies (1931-45); Bretton Woods and the New Gold Exchange Standard (1945-68); The Closing of the Gold Window and the Rise of the Floating Exchange Rate Regime (1971-?).
Conclusion: “The consequences of the end of the gold standard began to be felt in the 1970s. The devaluation of the USD substantially reduced Americans’ real wages. Before 1970, usually only one member of a family was able to support it. From the 1970s onwards, this began to change to the point where today this is only possible for wealthier people. Despite all the technological advancements, the standard of living today is lower than in the 1950s and the 1960s, as today, in order to live and to buy things they want or need, people need to work a lot more (and even go into debt). If the USD had not been devalued since 1913 (or even if it had been appreciated, which is what tends to occur when there is no monetary expansion), the standard of living would be much higher today.”