My generation says: “Each of us can remember where he was when he heard about Kennedy’s assassination.
I can remember where I was when I heard about Nixon’s killing of the phony gold standard that John Maynard Keynes and the Soviet spy Harry Dexter White designed in 1944.
It was a Sunday afternoon: August 15, 1971. I was preparing to leave Riverside, California to move to Irvington-on-Hudson, New York, to get my first full-time job. I would soon be a senior staff member of the Foundation for Economic Education. I would never again attend a graduate seminar. Free at last! Free at last!
The phone rang. My friend Bob Warford told me the news. Nixon had just announced that the U.S. Treasury would no longer sell gold to central banks at $35 an ounce or any price. He had floated the dollar: no more fixed exchange rates. It was the end of the Bretton Woods agreement. He had also declared full-scale price and wage controls. He had done this without consulting with Congress.
Here are the first two paragraphs. They are the words of a desperate man who refused to face reality on two fronts: foreign policy and monetary policy.
I have addressed the Nation a number of times over the past 2 years on the problems of ending a war. Because of the progress we have made toward achieving that goal, this Sunday evening is an appropriate time for us to turn our attention to the challenges of peace.America today has the best opportunity in this century to achieve two of its greatest ideals: to bring about a full generation of peace, and to create a new prosperity without war.
The Vietnam war did not end in his term of office. It ended in defeat in 1975.
This nation is still at war in Afghanistan. It is the forever war — the war on terrorism.
The controls were supposed to last 90 days. They lasted until April 1974.
Real wages began to stagnate in 1973.
This not only requires bold leadership ready to take bold action–it calls forth the greatness in a great people.Prosperity without war requires action on three fronts: We must create more and better jobs; we must stop the rise in the cost of living; we must protect the dollar from the attacks of international money speculators.
“We” must create better jobs. Who are “we”?
“We” must stop the rise in the cost of living. Over the next decade, prices rose faster than at any other time in peacetime American history.
“We” must protect the dollar from international speculators. Why did it need protecting? Because the Federal Reserve was inflating to get the economy out of Nixon’s two-year recession.
One of the cruelest legacies of the artificial prosperity produced by war is inflation. Inflation robs every American, every one of you.
True. But price inflation rose as never before in the United States under what he called the “new economic policy” — Lenin’s phrase from 1921.
I have today appointed a Cost of Living Council within the Government. I have directed this Council to work with leaders of labor and business to set up the proper mechanism for achieving continued price and wage stability after the 90-day freeze is over.Let me emphasize two characteristics of this action: First, it is temporary. To put the strong, vigorous American economy into a permanent straitjacket would lock in unfairness; it would stifle the expansion of our free enterprise system. And second, while the wage-price freeze will be backed by Government sanctions, if necessary, it will not be accompanied by the establishment of a huge price control bureaucracy. I am relying on the voluntary cooperation of all Americans-each one of you: workers, employers, consumers-to make this freeze work.
Controls lasted almost three years.
I have directed Secretary Connally to suspend temporarily the convertibility of the dollar into gold or other reserve assets, except in amounts and conditions determined to be in the interest of monetary stability and in the best interests of the United States.
Temporary = 45 years.
As we move into a generation of peace, as we blaze the trail toward the new prosperity, I say to every American: Let us raise our spirits. Let us raise our sights. Let all of us contribute all we can to this great and good country that has contributed so much to the progress of mankind.Let us invest in our Nation’s future, and let us revitalize that faith in ourselves that built a great nation in the past and that will shape the world of the future.
Thank you and good evening.
This speech marked the end of America’s uncontested economic domination.
The Dow Jones Industrial Average rose 33 points the next day. The National Association of Manufacturers praised Nixon’s program. The Chamber of Commerce praised it.
A blind man led the business community into the ditch.