Indestructible King for 50 Years, the U.S. Dollar Will Face a New Kind of Competition With Bitcoin
The world deserves an apolitical and neutral reserve currency like Bitcoin.
August 15, 1971, will certainly remain the most important date of the 20th century in the economic and financial field. This date marks the decision of American President Richard Nixon to abolish the convertibility of the American dollar to gold. We have just celebrated the 50th anniversary of this historic decision in August 2021.
Taken on a Sunday evening, before the opening of the financial markets, this decision inaugurated a new era: that of a currency supported by the sole credibility of the Treasury and therefore of the American government. The good old days of precious metals were over because the gold standard had been established by the Western nations about a century before this about-face.
Overnight, everything that had been measured against gold, that is to say, everything, was measured against the US dollar. The greenback was thus propelled as the new gold. In macroeconomic terms, the U.S. federal deficit grew from 2.1% of national GDP to about 13.5% today.
This unilateral bomb dropped by the Americans, as usual, if I may say so, must be analyzed in the context of a country that was struggling to emerge from the very unpopular war in Vietnam. About 15 of President Richard Nixon's closest advisors put intense pressure on him at his Camp David residence during that fateful weekend.
America takes the rest of the world by surprise to impose its American dollar
Nixon's entire economic policy and program were written off. In the words of the U.S. Treasury Secretary John Connally to reporters immediately after Richard Nixon's speech on August 15, 1971:
“I want to screw the foreigners before they screw us.”