Why Richard Nixon torpedoed the global monetary system

A century ago, when depositors lost confidence in a bank, they’d rush to withdraw their cash. In 1971, US president Richard Milhous Nixon faced a similar dilemma. But his problem wasn’t ordinary citizens fearing for their savings. Instead, it was America’s closest allies who were nervously eyeing the dwindling supply of gold in Fort Knox at a time when the dollar’s value was tied to gold and allies’ currencies were in turn tied to the dollar. And just like a beleaguered bank manager of yore, Nixon chose to shut America’s doors to further withdrawals. His decision threatened to pull the plug on the entire international monetary system established at Bretton Woods in 1944. It was so unexpected and outrageous, it became known as the “Nixon Shock”. In the first of two episodes on the topic, hosts Gillian Tett and Robin Wigglesworth get the story from economist and ex-financier Jeffrey Garten – a man with a CV so long that he once even worked for the Nixon administration himself.

Further reading:

Three Days at Camp David: How a Secret Meeting in 1971 Transformed the Global Economy, by Jeffrey E Garten (2021)

Gold and the dollar crisis, by Robert Triffin (1960)

Credits: Getty Images, the Richard Nixon Presidential Library

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Hosts: Gillian Tett and Robin Wigglesworth

Producer: Laurence Knight

Executive Producer: Manuela Saragosa

Original music: Breen Turner

Broadcast engineers: Bianca Wakeman and Petros Gioumpasis

Podcast Development: Laura Clarke

Video editor: Kristen Kenyon and Josh Divney at Podcast Discovery

Learn more at www.ft.com/tsom or get in touch at thestoryofmoney@ft.com.

Read a transcript of this episode on FT.com

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