Fifty years after Richard Nixon closed ‘the gold window’, the global economy is still not flexible enough

Nixon wanted to extricate himself from an unwinnable war, deliver a job-creating programme and raise the level of government spending. It will all sound familiar to Joe Biden, writes Phil Thornton

Richard Nixon (1913-1994) in a room at the Dorchester Hotel in London on 7 August 1963 (Getty)

Friday marked the 50th anniversary of the shock delivered to the global economy when US president Richard Nixon announced in a televised address that he was “closing the gold window”. In plain English, he was ending the convertibility of the US dollar to gold at $35 an ounce, as well as its fixed links with other major currencies.

It ended a world put in place in 1944, towards the end of the Second World War, that only people now in their seventies would have experienced first hand. The dollar’s value in gold was fixed at 1/35th of an ounce and 44 governments pledged that their currencies could be converted to dollars at a fixed exchange rate with room to move by just 1 per cent either side.

Trickie Dickie broke the link because the global economy had grown so fast, the US government could not back it up with gold. On top of that he wanted to extricate himself from an unwinnable war (Vietnam), deliver a job-creating programme, and raise the level of government spending. Replace some words in that previous sentence with “Afghanistan”, “American Jobs Plan” and “American Rescue Plan” and it all feels quite familiar.