The Nixon Shock: The Golden Rule at Bretton Woods (Part 1)

Gold, power, war, and spies—this series has it all. On August 15th 1971, President Nixon announced that he was suspending the dollar’s convertibility into gold. This announcement upended the Bretton Woods monetary system and set the world on a course towards floating exchange rates with the US dollar as a fiat reserve currency for world trade—a system that is under significant pressure today.In the first episode of the series, we tell the story of how an ambitious, little-known American technocrat—Harry Dexter White—went toe-to-toe with the world-famous John Maynard Keynes to rewrite the rules of global finance.Bretton Woods wasn’t just a conference. It put the US dollar at the center of a new monetary order, backed by roughly two-thirds of the world’s gold and America’s unrivaled economic power after World War II. Delegates representing 44 nations agreed to fixed exchange rates, created the IMF and World Bank, and made the dollar “as good as gold.”We trace how global leaders were traumatized by the economic chaos following World War I—trade wars, currency collapses, and the Great Depression. Against this backdrop, we explore how White moves from the periphery of academic economics to play a central role in FDR’s Treasury. From there he outmaneuvers John Maynard Keynes and secures American primacy, despite also moonlighting as a Soviet spy.This episode covers the genesis of a system every president from Truman to Nixon would struggle to defend—and the traces of which still shape the world economy today.Chapters:(00:18) Introduction(03:47) Background on Harry Dexter White(6:29) Economic Backdrop Leading to Bretton Woods(12:58) Barter Trade vs. Free Trade(15:22) Background on John Maynard Keynes(18:06) Keynes and White Meet in London(20:02) Harry Dexter White, from Periphery to Center(24:13) White Gets to Work on New Monetary System(32:24) US Leverage over the UK(37:32) The Build Up to Bretton Woods(41:54) Harry Dexter White’s Triumph at Bretton Woods(46:59) The Aftermath for White and Keynes(48:01) Reflections on White’s Soviet Espionage(55:16) Questions for Today’s Global Trade & Monetary SystemReferences:The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order by Benn Steilhttps://wtfhappenedin1971.com/ This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.backtestpodcast.com