Wrong again. Dollars were not backed by gold during the oils shocks of the 70s. Nixon removed gold backing in 1971. In fact this removal contributed to the oil shocks as the markets knew that there were too many dollars floating around.
Once again I never said that gold backed dollars at the time. I know the removal of the dollar from gold happened a little time before.
Nixon followed advice from his economic advisors who forsall the coming turmoil with the dollar. It was a much discussed item that the dollar was backed by a commodity of decreasing utility and increasing volatility. It was also projected that those with the commodity e.g. oil would be in the driver's seat of the US economy if the dollar continued to be backed by gold.
You are accurate I believe in that the oil shocks were in part caused by removing gold backing from the dollar. It also played a part in the heavy inflation of the 1970s. Had gold not been removed, the consequences would have been more severe in terms of volatility in valuing the dollar.
This is the second time you stated I was 'wrong'. In each case you assumed I was saying things that I did not say. I have to infer your aim is to dismiss anyone who questions your reasoning as 'wrong'. If that is the case I'm not sure I will respond in the future.
The abandonment of the Gold exchange rate, the rising oil prices, and the double digit inflation of the late 70s under Carter, all have the same cause, the reckless increase in the supply of Dollars, which accelerated under LBJ, when we had a war with both "guns and butter," at the same time--as well as the launching of the "Great Society" nonsense.
The Bush coupling of staying in Iraq, while launching a horrendous prescription Medicare program next year, and not really cutting back on much else, will garner a similar multi-faceted crisis in the not so distant future. We need to understand that economic laws work, whether the culprit is a Democrat or Republican. And we need to find statesmen, who will not squander the fruits of American productivity, trying to be all things to all men.
William Flax