The Nixon Shock
This spread from Bloomberg Business Week opens an article about the U.S. economy in 1971. Richard Nixon was president and in 1969 the United States balance of payments deficit had reached $7 billion, peanuts by today's numbers but significant 40 years ago.
By the time Nixon resigned in August 1974, inflation was 11 percent and would go even higher.
According to the article, The Nixon Shock was a monetary strategy that involved three points.
First, America would stop converting dollars to gold.
Second, to combat the potential inflationary effects, wages and prices would be frozen for 90 days. This was a bold move given that unions representing, copper, steel and telephone workers were in the midst of negotiating 30 percent wage increases over three years.
And third, the U.S. would impose an import surcharge of 10 percent as a way to pressure other countries to renegotiate their exchange rates.
This is all heady stuff and a bit beyond me, but once again Business Week’s magazine designer has created a striking piece of typography that intrigued me enough to read the article.