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The Water Cooler
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President Nixon taps out
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<blockquote data-quote="TedKennedy" data-source="post: 4309364" data-attributes="member: 25419"><p>At the time, the U.S. also had an unemployment rate of 6.1% (August 1971)<a href="https://en.wikipedia.org/wiki/Nixon_shock#cite_note-usunemploy-13" target="_blank">[13]</a><a href="https://en.wikipedia.org/wiki/Nixon_shock#cite_note-14" target="_blank">[notes 1]</a> and an inflation rate of 5.84% (1971).<a href="https://en.wikipedia.org/wiki/Nixon_shock#cite_note-inflationdata_1950_2013-15" target="_blank">[14]</a> To combat these problems, Nixon consulted <a href="https://en.wikipedia.org/wiki/Federal_Reserve" target="_blank">Federal Reserve</a> chairman <a href="https://en.wikipedia.org/wiki/Arthur_Burns" target="_blank">Arthur Burns</a>, incoming <a href="https://en.wikipedia.org/wiki/Treasury_Secretary" target="_blank">Treasury Secretary</a> <a href="https://en.wikipedia.org/wiki/John_Connally" target="_blank">John Connally</a>, and <a href="https://en.wikipedia.org/wiki/Paul_Volcker" target="_blank">Paul Volcker</a>, then Undersecretary for International Monetary Affairs and future Federal Reserve Chairman.</p><p></p><p>On the afternoon of Friday, August 13, 1971, Burns, Connally, and Volcker, along with twelve other high-ranking White House and Treasury advisors, met secretly with Nixon at <a href="https://en.wikipedia.org/wiki/Camp_David" target="_blank">Camp David</a>. There was great debate about what Nixon should do, but ultimately Nixon, relying heavily on the advice of the self-confident Connally, decided to break up Bretton Woods by announcing the following actions on August 15:<a href="https://en.wikipedia.org/wiki/Nixon_shock#cite_note-The_Nixon_Shock_Heard_%27Round_the_World-16" target="_blank">[15]</a><a href="https://en.wikipedia.org/wiki/Nixon_shock#cite_note-17" target="_blank">[16]</a><a href="https://en.wikipedia.org/wiki/Nixon_shock#cite_note-18" target="_blank">[17]</a></p><p></p><ol> <li data-xf-list-type="ol">Nixon directed <a href="https://en.wikipedia.org/wiki/United_States_Secretary_of_the_Treasury" target="_blank">Treasury Secretary</a> <a href="https://en.wikipedia.org/wiki/John_Connally" target="_blank">Connally</a> to suspend, with certain exceptions, the convertibility of the dollar into gold or other reserve assets, ordering the <a href="https://en.wikipedia.org/wiki/Gold_window" target="_blank">gold window</a> to be closed such that foreign governments could no longer exchange their dollars for gold.</li> <li data-xf-list-type="ol">Nixon issued <a href="https://en.wikipedia.org/wiki/Executive_order" target="_blank">Executive Order</a> <a href="https://en.wikisource.org/wiki/Executive_Order_11615" target="_blank">11615</a> (pursuant to the <a href="https://en.wikipedia.org/wiki/Economic_Stabilization_Act_of_1970" target="_blank">Economic Stabilization Act of 1970</a>), imposing a 90-day freeze on wages and prices in order to counter inflation. This was the first time the U.S. government had enacted wage and price controls since World War II.</li> <li data-xf-list-type="ol">An import surcharge of 10 percent was set to ensure that American products would not be at a disadvantage because of the expected fluctuation in exchange rates.</li> </ol><p>Speaking on television on Sunday, August 15, when American financial markets were closed, Nixon said the following:</p></blockquote><p></p>
[QUOTE="TedKennedy, post: 4309364, member: 25419"] At the time, the U.S. also had an unemployment rate of 6.1% (August 1971)[URL='https://en.wikipedia.org/wiki/Nixon_shock#cite_note-usunemploy-13'][13][/URL][URL='https://en.wikipedia.org/wiki/Nixon_shock#cite_note-14'][notes 1][/URL] and an inflation rate of 5.84% (1971).[URL='https://en.wikipedia.org/wiki/Nixon_shock#cite_note-inflationdata_1950_2013-15'][14][/URL] To combat these problems, Nixon consulted [URL='https://en.wikipedia.org/wiki/Federal_Reserve']Federal Reserve[/URL] chairman [URL='https://en.wikipedia.org/wiki/Arthur_Burns']Arthur Burns[/URL], incoming [URL='https://en.wikipedia.org/wiki/Treasury_Secretary']Treasury Secretary[/URL] [URL='https://en.wikipedia.org/wiki/John_Connally']John Connally[/URL], and [URL='https://en.wikipedia.org/wiki/Paul_Volcker']Paul Volcker[/URL], then Undersecretary for International Monetary Affairs and future Federal Reserve Chairman. On the afternoon of Friday, August 13, 1971, Burns, Connally, and Volcker, along with twelve other high-ranking White House and Treasury advisors, met secretly with Nixon at [URL='https://en.wikipedia.org/wiki/Camp_David']Camp David[/URL]. There was great debate about what Nixon should do, but ultimately Nixon, relying heavily on the advice of the self-confident Connally, decided to break up Bretton Woods by announcing the following actions on August 15:[URL='https://en.wikipedia.org/wiki/Nixon_shock#cite_note-The_Nixon_Shock_Heard_%27Round_the_World-16'][15][/URL][URL='https://en.wikipedia.org/wiki/Nixon_shock#cite_note-17'][16][/URL][URL='https://en.wikipedia.org/wiki/Nixon_shock#cite_note-18'][17][/URL] [LIST=1] [*]Nixon directed [URL='https://en.wikipedia.org/wiki/United_States_Secretary_of_the_Treasury']Treasury Secretary[/URL] [URL='https://en.wikipedia.org/wiki/John_Connally']Connally[/URL] to suspend, with certain exceptions, the convertibility of the dollar into gold or other reserve assets, ordering the [URL='https://en.wikipedia.org/wiki/Gold_window']gold window[/URL] to be closed such that foreign governments could no longer exchange their dollars for gold. [*]Nixon issued [URL='https://en.wikipedia.org/wiki/Executive_order']Executive Order[/URL] [URL='https://en.wikisource.org/wiki/Executive_Order_11615']11615[/URL] (pursuant to the [URL='https://en.wikipedia.org/wiki/Economic_Stabilization_Act_of_1970']Economic Stabilization Act of 1970[/URL]), imposing a 90-day freeze on wages and prices in order to counter inflation. This was the first time the U.S. government had enacted wage and price controls since World War II. [*]An import surcharge of 10 percent was set to ensure that American products would not be at a disadvantage because of the expected fluctuation in exchange rates. [/LIST] Speaking on television on Sunday, August 15, when American financial markets were closed, Nixon said the following: [/QUOTE]
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