WTF Happened in 1971?

mars 27, 2021

Starting in the mid-1960s, various European countries began demanding payment for their dollars in gold. They wanted the US to balance its budget, which had gone wildly into deficit because of the Vietnam War.

The US was literally using Air Force planes to ship gold from Fort Knox to New York and outbound. You can read many interesting stories like this one. We tend to think of crises as happening over very short periods. This one was building for years.

August 15, 1971, President Nixon ended the Bretton Woods system

The dollar crashed even more and we had to invent the word “stagflation” to define the widespread misery.

A host of writers and websites have chronicled the seemingly sudden changes. For instance, try WTF Happened in 1971?

Hourly compensation grew roughly in line with productivity from 1948 until the early 1970s. From there, productivity rose far faster than income.

College degrees have become a proxy for the IQ tests that were made illegal 50 years ago. They aren’t a particularly good proxy, but large employers lack better options.