50 years ago on August 15th 1971, US-president Nixon suspended the convertibility of the US Dollar into gold, thereby abolishing the backing of the US Dollar by corresponding gold & silver reserves and leading the world into the era of FIAT money.
A thread👇 #wtfhappenedin1971
A thread👇 #wtfhappenedin1971
1/ When the US Dollar was first issued, it was a form of commodity money, deriving its value from the commodity it’s made from (e.g. silver coins).
USD bills on the other hand represented a claim on the underlying commodity (gold or silver), therefore effectively being an IOU.
USD bills on the other hand represented a claim on the underlying commodity (gold or silver), therefore effectively being an IOU.
2/ This all changed on the 15th of August 1971, when the “Nixon shock” transformed the US Dollar from a representative currency to the FIAT currency we use today. 
3/ Without the physical limitation of gold as the bottleneck for the money printer, the federal reserve turned it to full blast, leading to an explosion of money supply over the past 50 years.
4/ Regarding the social & economic consequences of this change, @WTF_1971 has a lot of info. Financial inequality drastically increased, personal savings rates died, government debt and budget deficits skyrocketed, among many other negative trends.
5/ The abolishment of the gold standard and subsequent money printing frenzy that has now been going on for 50 years, have also lead to increased inflation. This means that the purchasing power of the currency is falling.
6/ The one dollar bill in your wallet is not backed by any form of reserve asset on which you have a claim. FIAT money is backed by debt and not assets, which is basically the opposite of what money used to be for thousands of years before the “Nixon shock”.
7/ Moreover, the US Dollar in your wallet loses purchasing power every day and therefore certainly is not an adequate store of value.
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