The inflection point in most of these charts happen after 1971, many closer to 1980.
WTF Happened in 1971? (2019)
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Re: WTF Happened in 1971? (2019)
#12Amazed that the site does not call out Nixon completely abandoning the gold standard in 1971. Financial investments thusly did not need to be backed by actual assets anymore, to the point of today where the whole of money is loans against loans against loans.
That’s the point of the site. It doesn’t say it explicitly but leaving the gold standard is the answer to the question in the URL
Re: WTF Happened in 1971? (2019)
#13Amazed that the site does not call out Nixon completely abandoning the gold standard in 1971. Financial investments thusly did not need to be backed by actual assets anymore, to the point of today where the whole of money is loans against loans against loans.
While I'm sympathetic to strong money and therefore explanations like that, it could just as well be that another factor has more explanatory power -- i.e. something else put the US into such dire straits that officials didn't find it feasible to honor the peg.
So, what about the (perhaps too simple) explanation that 1971 is when the developed world finally caught up from the destruction of WWII and investors recognized this? That would mean an end to free wealth for the US, as factor productivity is no longer the highest in the world.
Re: WTF Happened in 1971? (2019)
#14I guess that explains the unending poverty and economic decline we've faced for the last 50 years.
except we've had unambiguously massive economic growth the unending poverty (that I'd remind you has always been worse historically it's just below the poor back then were slaves or indentured servants) is a policy consequence of increasing the share of income paid to the wealthiest (by reducing their taxes and globalization undermining labor power).
Right, some people might want to point to a single monetary policy or event but this is a sustained trend of piling on policy after policy. This looks like a "new" ideology showed up and drove policy decisions in a different direction.
Re: WTF Happened in 1971? (2019)
#15How do economists measure "productivity", and it is a worthwhile metric? It always seemed super sketchy to me.
Re: WTF Happened in 1971? (2019)
#16What happened was Nixon devauled the US Dollar, before it ws pegged to $35 per oz Gold and the US had to pay debts in Gold. https://en.wikipedia.org/wiki/Nixon_Shock
To be fair, his hand was kind of forced. Other countries were already abandoning Bretton Woods, considering it unfair as it gave the US a disproportionate amount of power to manipulate its currency. It's similar to the currency value struggles that have been a major fault line in the EU.
Re: WTF Happened in 1971? (2019)
#17“The government held the $35 per ounce price until August 15, 1971, when President Richard Nixon announced that the United States would no longer convert dollars to gold at a fixed value, thus completely abandoning the gold standard.” These graphs are why I invest in Bitcoin. I see so many similarities to assignats and the lead up to the French Revolution, from the wiki- “The economy did poorly in 1790–96 as industri…
How does bitcoin solve this? Last time I checked there's no fixed bitcoin price either. The currency is so volatile on news, it's sagging and spiking all over the place.
Re: WTF Happened in 1971? (2019)
#18Amazed that the site does not call out Nixon completely abandoning the gold standard in 1971. Financial investments thusly did not need to be backed by actual assets anymore, to the point of today where the whole of money is loans against loans against loans.
That theory would explain financial gains going up faster (eg the pie getting bigger, more return to capital), but not a stall in wages for workers. Worker productivity went up, but wages for workers did not.
~1970 is about when the % of workers in unions really started to fall in the US.
Re: WTF Happened in 1971? (2019)
#19Reminds me of https://tylervigen.com/old-version.html
Especially some of those graphs about stuff like childhood obesity.
It would be nice if all problems in a society had a single, simple cause (bad people doing stuff!) and a single, simple solution (stop 'em!), but the world is a complex place
I did notice that the people hawking bitcoin didn't include any graphs about climate change..
Re: WTF Happened in 1971? (2019)
#20What happened was Nixon devauled the US Dollar, before it ws pegged to $35 per oz Gold and the US had to pay debts in Gold. https://en.wikipedia.org/wiki/Nixon_Shock
The Nixon Shock was the culmination of several years of gradual collapse of the post-war economic system (including Bretton Woods). If you look carefully at the graphs on that page, a lot of them were trending upwards before 1971.