DEFINITION of 'Nixon Shock'
A term used to describe the actions taken by former U.S. President Richard Nixon in 1971 that eventually led to the collapse of the Bretton Woods system. The policies imposed and the actions taken by President Nixon included imposing a 90-day wage and price freeze in America, a 10% import surcharge and, most notably, closing the gold window, effectively making the U.S. dollar inconvertible to gold.
BREAKING DOWN 'Nixon Shock'
The ramifications of Nixon Shock rocked the global economic landscape. By closing the gold window, the United States made it impossible for other nations to peg their currency to the gold standard, which was the underlying principle behind the Bretton Woods system. As a direct result of the economic policies imposed by the United States at the time, the gold standard was all but abandoned and the world's major currencies began to float.
-
Smithsonian Agreement
The Smithsonian Agreement was a deal reached in 1971 among the ... -
Adjustable Peg
An adjustable peg is an exchange rate policy where a currency is ... -
USD
The USD is the abbreviation for the U.S. dollar. -
Foreign Exchange Reserves
Foreign exchange reserves are reserve assets held by a central ... -
Reserve Currency
A reserve currency is held by central banks and other major financial ... -
International Finance
International finance is a section of financial economics that ...
-
InsightsThe Great Inflation of the 1970s
In the 1970s, moves meant to prevent unemployment instead did the opposite, rocketing inflation and creating one of the worst fiscal disasters of the century. -
TradingGlobal Trade And The Currency Market
Learn how the Bretton Woods system got the ball rolling for world trade. -
TradingHow the U.S. Dollar Became the World's Reserve Currency
The U.S. dollar was first minted in 1914. Find out what occurred during the last century to make the U.S. dollar the world's reserve currency. -
TradingForex: World's Biggest Market A Relative Newcomer
Unlike the stock markets, the forex market is a truly new market. We’ll take a brief look at its origins and how it works today. -
InvestingHow Gold Affects Currencies
Learn about the strong correlation between gold's value and the strength of currencies trading on foreign exchanges. -
InvestingWho Holds The Largest Gold Reserves?
The biggest holders of gold account for 30,500 of the world's estimated 160,000 tonnes. -
Insights4 Government Interventions: Did They Work?
President Obama isn't the first leader to step in the middle of a potential Federal crisis - how did the others fare? -
InvestingThe Midas Touch For Gold Investors
Find some golden opportunities by investing in gold commodities or futures contracts. -
InvestingWhat Drives The Price Of Gold?
Gold prices are based on the economy and actual uses, but there are many other factors that dictate gold's perceived value.
-
Has gold been a good investment over the long term?
Examine the investment performance of gold dating back to 1933, when President Roosevelt required all gold bullion, coins ... Read Answer >>