Modern finance · 1950s–1990s
1971
The end of gold and a price freeze
President Nixon ends the dollar's link to gold and freezes wages and prices.
On 15 August 1971, President Nixon stopped converting dollars into gold for foreign governments and ordered a 90-day freeze on wages and prices.
Price controls brought shortages over the next few years, and the dollar became a currency backed by trust rather than gold.
💡 Why it made sense then
The US was running low on gold and inflation was rising, and the government wanted quick action.
Ideas it gave us
- ⚖️ Price ceiling
A price ceiling is a legal maximum price, like rent control; a price floor is a legal minimum, like a minimum wage. A binding ceiling causes shortages and a binding floor causes surpluses.
- 🌍 Money supply
The money supply is the total amount of money in an economy. M1 counts cash and checking deposits; M2 adds savings and other near-money.
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