Stray Reflections When America broke the system
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Jan 3, 2026 Explore the seismic shift in the global economy in 1971 when the U.S. ended the gold standard. Hear about the rising tensions at Bretton Woods and the Volcker Group's warnings of vulnerabilities. Discover how Nixon's distrust of the Fed and surprising decisions spun the world into chaos. Connolly's hardline stance and the resulting diplomacy reveal a turbulent era. Finally, draw parallels to today’s economic landscape, where the dollar's dominance is increasingly in question, hinting at a new era of currency competition.
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Dollar–Gold Link Was Structurally Broken
- The Bretton Woods dollar–gold link became unsustainable as U.S. liabilities far outpaced gold reserves by 1971.
- That imbalance, driven by military spending, capital outflows, and trade shifts, made a systemic reset inevitable.
Connolly's Hardline Playbook
- John Connolly declared the U.S. would no longer bear disproportionate economic costs for allies and pushed a confrontational stance.
- He famously said, "I want to screw the foreigners before they screw us," crystallizing the administration's nationalist tilt.
Shock Doctrine To Force Monetary Reform
- Nixon's Camp David weekend combined closing the gold window, an import surcharge, and wage-price controls as a package shock.
- The move used unilateral leverage to force rapid renegotiation of the global monetary order.
