Five Percent Inflation

Lest one suppose that five percent inflation is no big deal, look at the numbers leading up to August 15, 1971, when President Nixon slammed shut the gold window and ushered in the age of stagflation.

Via Wikimedia Commons
President Nixon in 1971, the year he severed the historic link between the dollar and gold. Via Wikimedia Commons

The slowdown in the pace of inflation — to five percent from the six percent reported last month — is a moment to revisit what triggered the collapse of the global monetary system that had been erected in the closing months of World War II. We speak of Bretton Woods, under which America had undertaken to redeem at a 35th of an ounce of gold per dollar greenbacks presented to our Treasury by foreign governments.

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