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In: Economics

arguments as to why president nixon elected to suspend the convertibility of the us dollar to...

arguments as to why president nixon elected to suspend the convertibility of the us dollar to gold

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Expert Solution

Firstly,lets us know about,what is meant by Nixon shock',

It if defined as the, Nixon Shock is a phrase used to describe the aftereffect of a set of economic policies touted by former President Richard Nixon in 1971.

Most notably, the policies eventually led to the collapse of the Bretton Woods system of fixed exchange rates that went into effect after World War II.

** Nixon directed Treasury Secretary Connally to suspend, with certain exceptions, the convertibility of the dollar into gold or other reserve assets, ordering the gold window to be closed such that foreign governments could no longer exchange their dollars for gold.

* While Nixon's actions did not formally abolish the existing Bretton Woods system of international financial exchange, the suspension of one of its key components effectively rendered the Bretton Woods system inoperative.

While Nixon publicly stated his intention to resume direct convertibility of the dollar after reforms to the Bretton Woods system had been implemented, all attempts at reform proved unsuccessful.

By 1973, the Bretton Woods system was replaced de facto by the current regime based on freely floating fiat currencies,some of the points about the tnixon elected to suspend the convertibility of the us dollar to gold;

* The Nixon Shock was the catalyst for the stagflation of the 1970s as the U.S. dollar devalued.

* The Nixon Shock effectively led to the end of the Bretton Woods Agreement and the convertibility of U.S. dollars into gold.

*  The Nixon Shock was an economic policy shift undertaken by President Nixon to prioritize the United States' economic growth in terms of jobs and exchange rate stability.

some are the important word,why president nixon elected to suspend the convertibility of the us dollar to gold, The Nixon Shock was an economic policy shift undertaken by President Nixon to prioritize the United States' economic growth in terms of jobs and exchange rate stability. The Nixon Shock effectively led to the end of the Bretton Woods Agreement and the convertibility of U.S. dollars into gold.


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