
The Nixon Shock (2011) - jokoon
http://www.bloomberg.com/news/articles/2011-08-04/the-nixon-shock
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jokoon
I'm not very literate in economics.

On this wikipedia article
[https://en.wikipedia.org/wiki/Nixon_shock](https://en.wikipedia.org/wiki/Nixon_shock)
Krugman is quoted

> The current world monetary system assigns no special role to gold; indeed,
> the Federal Reserve is not obliged to tie the dollar to anything. It can
> print as much or as little money as it deems appropriate. There are powerful
> advantages to such an unconstrained system. Above all, the Fed is free to
> respond to actual or threatened recessions by pumping in money. To take only
> one example, that flexibility is the reason the stock market crash of
> 1987—which started out every bit as frightening as that of 1929—did not
> cause a slump in the real economy.

> While a freely floating national money has advantages, however, it also has
> risks. For one thing, it can create uncertainties for international traders
> and investors. Over the past five years, the dollar has been worth as much
> as 120 yen and as little as 80. The costs of this volatility are hard to
> measure (partly because sophisticated financial markets allow businesses to
> hedge much of that risk), but they must be significant. Furthermore, a
> system that leaves monetary managers free to do good also leaves them free
> to be irresponsible—and, in some countries, they have been quick to take the
> opportunity.[18]

I'm still trying to understand why some people argue FOR the gold standard,
and if they're right, does that mean the Fed must avoid financial crashes due
to floating currency?

