50 years since Nixon ended the "Gold Standard"
On August 15, 1971, about 50 years ago. Richard Nixon, president of the United States at the time, decided to end the the "Gold Standard." A monetary system in which the standard economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from the late 1920s to 1932 as well as from 1944 until 1971 when the United States unilaterally terminated convertibility of the US dollar to gold foreign central banks, effectively ending the Bretton Woods system. Many states still hold substantial gold reserves. (wikipedia)
Historically, the validity of the gold standard began during the 19th century as the basis of the international financial system. It ended as a result of the First World War, since the belligerent governments needed to print a lot of money to finance the war effort without having the ability to back that money with precious metals.
During the Bretton Woods agreement, it was decided to adopt the US dollar as an international currency, under the condition that the Federal Reserve (the USA central bank) held the gold standard, but as of 1971 it was definitively bankrupt; so the dollar became de facto a fiat currency backed by a US government imposition and without intrinsic value, but with a legal value of its own.
This decision by President Richard Nixon, resoundingly and forever affected the value of the dollar, the American economy, the economic inequality between the working class and the upper class and created a system in which the rich became extremely richer very fast and the worker was barely able to meet their financial needs.
In the above graph we can see how the growth of the worker's salary has remained stagnant since the "Gold Standard" was abandoned while the wealth of the upper class (1% of the United States population) has risen rapidly without a significant slow down.
The value of gold, the precious metal to which the value of the dollar was pegged to, has soared 150,000% since 1971. In that year the value of gold was 1: 1 with the dollar. Today an ounce can cost an average of $1500 per ounce. (see below)
This has left us with a huge inflation rate of near 160,000% from which we will not be able to recover given that the monetary policy of the United States continues to be based on the printing / creation of more dollars in order to afford the much needed infrastructure, (no so needed) wars, and other expenses and economic needs.
The introduction of cryptocurrencies has given us an opportunity to participate in a completely decentralized, democratic market, whose value is directly related to supply and demand. For many enthusiasts, crypto has become similar to a voting system that allows us to promote a financial structure which gives power back to the people. This financial technology has given way to a creative avalanche of applications and protocols that has and will continue to catapult the crypto economy and those who participate in it. Obviously, with some risk involved. And in turn, it has angered governments and banking institutions because they cannot exert the same amount of control that they are used to having with fiat currencies.
This space is still developing and growing, governments will continue to regulate the industry, but it is clear that the future will never be the same. Bitcoin may not be the currency of the future, the future currency will be decentralized. We have to stay informed and alert, because the world is rapidly changing.