I remember watching a segment about it. If I remember correctly, Nixon did it to screw over Great Britain because they were demanding the US pay its debt to it in gold dollars.
Creating the federal reserve was the problem. Nixon was only reacting to a problem.
The requirement for a coincidence of wants in a transaction is why barter doesn't work: you need money.
We currently use fiat currency in place of money: but we are starting to realize why this is unworkable. Fiat currency does not act as a store of value: money - true money - does.
Given free market conditions we would probably end up moving to a hybrid system where savings are in Gold/Silver and where paper/electrons based off those savings are used for day-to-day trading.
Pure fiat currencies (I hope) will become a warning from history: - as ludicrous as the 1637 Tulip mania - at least until we collectively forget why fiat currencies are always doomed to failure.
The article makes a good point about all countries being in uncharted monetary seas. However, the first statement in this news report is untrue, which can be confirmed by table 4.2 linked to below. Defense spending never again equaled the 46.9% of the federal budget it did in 1962. LBJ’s Great Society programs were already starting to break the budget.
LINK: http://www.whitehouse.gov/omb/budget/Historicals
Up to WW II any creditable currency was pegged to a gold/silver standard, which would have included the money of Washington’s time as President. During the Revolution the Continental Congress tried printing paper currency not backed by real assets to pay for the war, and hence the term “not worth a Continental”. Then during the Civil War, both the Union and Confederacy issued paper currency unsupported by real assets. Depending on Union fortunes, the paper traded as low as 40% in relation to gold coins. By 1864 Confederate currency had a gold value of five cents on the dollar. The U.S. didn’t try anything like that again until FDR confiscated gold coins during the Depression, but silver coins were still minted and still freely circulated.
While WWII destroyed most economies of the world, the United States prospered. The only way to restart international economic activity was for the U.S. to take the lead, which it did with the Bretton Woods Agreement. Every currency had a fixed value in relation to the dollar, and the U.S. kept everything functioning by buying and selling gold at $35 an ounce. Therefore, once again there was a U.S. gold standard and the dollar became the world’s reserve currency. However, Americans could not take their Federal Reserve Notes to a Fed bank and trade them for gold.
The U.S. unilaterally abrogated the agreement in August 1971, allowed the dollar to float in relation to the trading whims involving all paper currencies. Until about 1968 people could still trade their Federal Reserve notes for Silver Certificates and trade those for packets of silver from a Federal Reserve Bank. When the government renounced that option, silver coins quickly disappeared from circulation. At this time the working careers of a single generation comprise the totality of comprehension for how the international community was to function economically without currencies emerging from things people can touch and see.
BTTT
How fitting today, although not related to the premise of the song, are the lyrics: “You’re indestructible/Always believe in/because you are/Gold ...” - From Spandau Ballet’s 1983 song “Gold” (follow-up to their biggest hit, “True”)
For more on this topic: http://www.examiner.com/jewish-culture-in-philadelphia/price-over-1-800-oz-earns-gold-spandau-ballet-8-10-song-of-the-day-honor#ixzz1UiXUGXST