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.
-
Bretton Woods Agreement
A landmark system for monetary and exchange rate management established ... -
Smithsonian Agreement
The Smithsonian Agreement was a deal reached in 1971 among the ... -
Gold Standard
The gold standard is a system in which a country's government ... -
USD
The USD is the abbreviation for the U.S. dollar. -
Floating Exchange Rate
A country's exchange rate regime where its currency is set by ... -
Reserve Currency
A reserve currency is held by central banks and other major financial ...
-
InsightsThe Great Inflation of the 1970s
Political moves meant prevent unemployment served to do the opposite, 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
There is a strong correlation between gold's value and the strength of currencies trading on foreign exchanges. -
InsightsHow the Two Faces of Trump are Shaking the Market
As Trump moves between pro-growth and protectionist policies, wild swings in the market are likely. -
InvestingDoes it Still Pay to Invest in Gold?
Gold's appeal dates back thousands of years. Find out whether gold can live up to the hype. -
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.
-
What countries have the largest gold reserves?
Find out which countries have the largest gold reserve stockpiles, and learn why governments still feel that it's necessary ... Read Answer >> -
Which country has the most gold?
Learn which countries hold the most in gold reserves, and explore the reasons holding gold may be beneficial to a country's ... Read Answer >> -
For investors, what are the alternatives to owning physical gold?
Learn some of the primary alternate ways that someone can invest in the gold market besides simply purchasing physical gold ... Read Answer >>