Probably related to this was US domestic Peak Oil was predicted to occur in 1970. Peak Oil merely means that 50% of a finite reserve has been used: there's another 50% still left but production will get more expensive and eratic. That was the year we largely switched to Saudi oil and the Arab Oil Embargo came only 3 years later. Before 1970, the US modulated the US dollar value with increasing or decreasing oil production/exports. In 1970 that strategy ended. Some believe that Saudi Arab and the countries that became OPEC realized they were now in control of the US dollar as reserve currency. Both the Six Day War and the Yom Kippur war combined with Arab nationalism led to flexing this power by OPEC doing the oil control the US had.
This is also related to how bread prices never changed FOR CENTURIES until the 20th century with the big rise happening in 1970.
A lot of this also came from having no effective industrial competitors after WW2 and then being lazy through the 1950s and then screwing up with a very expensive wars in Korea, Vietnam and other places that were NOT funded by war bonds as in WW2 but were funded with deficit spending with no equivalent back-stop. In the 1950s and 1960s we were still using industrial technologies from the 1920s in terms of fundamentals like steel, aluminum, cars, etc. Germany and Japan had lost all their legacy infrastructure and had the advantage of starting from scratch.
Basically a lack of monetary and fiscal self-discipline.
> Well, we went entirely off the gold standard and starting printing money.
Germany had a similar dynamic actually speaking about proportionally less money in employees' bank accounts. And the explanation is simple and I think already mentioned, due to the reconstruction efforts after the war the economy expanded a lot and many people could raise their standards of living easily. Surely that couldn't continue until forever.
At the same time this paved the way for more hawkish politics both in the US and in Europe. IMHO this doesn't have much to do with decoupling from Gold. I think only the Money supplies M0 and MB were coupled to it but the others M1-M3 which are larger by several orders of magnitude can even be created by commercial banks.
The curve of M2 isn't changing much in direction during 1970:
Interesting to note that Nixon essentially did nothing more than come clean by making official what the US had already been doing for years, printing money they didn’t have gold for.
Reaganomics reminds me of that line from Wolf of Wall Street: "Meanwhile he thinks he's getting ... rich, which he is on paper, meanwhile we're taking home cold hard cash in the form of commissions ...!"
What I believe your saying is the price of bread in terms of gold was standard for centuries. Does that relationship still hold?
The thing is that money doesn’t matter. It’s just a unit for the transactions does in the short term. The relationship of real things, like bread and gold, matter.
https://www.federalreservehistory.org/essays/gold-convertibi...
Probably related to this was US domestic Peak Oil was predicted to occur in 1970. Peak Oil merely means that 50% of a finite reserve has been used: there's another 50% still left but production will get more expensive and eratic. That was the year we largely switched to Saudi oil and the Arab Oil Embargo came only 3 years later. Before 1970, the US modulated the US dollar value with increasing or decreasing oil production/exports. In 1970 that strategy ended. Some believe that Saudi Arab and the countries that became OPEC realized they were now in control of the US dollar as reserve currency. Both the Six Day War and the Yom Kippur war combined with Arab nationalism led to flexing this power by OPEC doing the oil control the US had.
https://en.wikipedia.org/wiki/Hubbert_peak_theory
Here's a data point on the inflation that caused: the in-store menu and prices of McDonald's in 1972. Nothing over $1.
https://imgur.com/a/2lubC0D
This is also related to how bread prices never changed FOR CENTURIES until the 20th century with the big rise happening in 1970.
A lot of this also came from having no effective industrial competitors after WW2 and then being lazy through the 1950s and then screwing up with a very expensive wars in Korea, Vietnam and other places that were NOT funded by war bonds as in WW2 but were funded with deficit spending with no equivalent back-stop. In the 1950s and 1960s we were still using industrial technologies from the 1920s in terms of fundamentals like steel, aluminum, cars, etc. Germany and Japan had lost all their legacy infrastructure and had the advantage of starting from scratch.
Basically a lack of monetary and fiscal self-discipline.