by Lance Roberts
Real Investment Advice
Before reading this article we highly recommend reading “The Death of the Virtuous Cycle” to provide better context.
July 4th – June 6th – September 11th – August 15th
You likely associated the first three dates above with transformative events in U.S. history. August 15th, however, may have you scratching your head.
August 15, 1971 was the date that President Richard Nixon shocked the world when he closed the gold window, thus eliminating free convertibility of the U.S. dollar to gold. This infamous ‘new economic policy’, or “Nixon Shock”, thereby removed the requirement that the U.S. dollar be backed by gold reserves. From that fateful day forward, constraints were removed that previously hindered the Federal Reserve’s (Fed) ability to manage the U.S. money supply. Decades later, slowing economic growth, nonexistent wage growth, growing wealth disparity, deteriorating productivity growth and other economic ills lay in the wake of Nixon’s verdict.