On August 15, 1281, the Mongolian fleet of Kublai Khan was destroyed by a “divine wind” for the second time in the Battle of Kōan.
On August 15 in 1971, President Richard Nixon ended convertibility of the United States dollar into gold by foreign investors. The dollar has remained fiat money ever since, but — mysteriously! — did not succeed in retaining its previous value.
But then, the dollar under the previous quasi-gold, Bretton-Woods Agreement wasn’t stable either, which is why Nixon felt compelled to close the gold window.
1 reply on “The Wind & the Window”
One of my problems with Arthur Laffer was in his call to restore the Bretton-Woods monetary order. My guess is that he still favors the idea. But, as you note, it had its own problems.
But, then, I often object to proponents of a classic gold standard. The original dollar was a weight of silver. When Congress seized the right to redefine “dollar” as a measure of gold, Congress seized the right to redefine “dollar”, paving the way to later redefining it to be a smaller measure of gold, and then to be no measure at all.
The ideal monetary order would be denationalized. Indeed, truly allowing markets to fully determine prices entails allowing markets to choose the common medium of exchange.