Beyond Bretton Woods — Part Six of Our Series
By STEVE FORBES, Special to the Sun | August 11, 2021
We are still suffering today from the baleful consequences of August 15, 1971, when President Nixon ended the convertibility of United States dollars into gold.
If after that fateful day the United States had maintained the average rate of economic growth that it had achieved over the previous 180 years, when it operated under a gold standard, the economy would be at least 50% larger than it is today.
Economies can’t grow without investment. You get more long-term, productive investment when the value of money is not constantly fluctuating. Investing is risky enough, but if you don’t know what the value of the dollar will be in the future, time horizons shorten. Hedging and currency speculation become endemic. The average daily turnover of currency trading is now more than $5 trillion, far in excess of what is needed to efficiently finance global trade.
Ever wonder where the hedge fund industry came from?