Day of Infamy.
08/14/2001 02:00:00 PM
Memo To: Fed Chairman Alan Greenspan
From: Jude Wanniski, Polyconomics
Re: Our Floating Unit of Account
" Do you remember, Alan, where you were when you learned President Richard Nixon took the United States off the gold standard, Sunday, August 15, 1971? I remember listening to a radio announcement at a backyard family picnic in Schuylkill Haven, Pa., at about 3:30 p.m. At the time, I had no idea what it meant, or whether it was a good thing or a bad thing. You know, in all the years we've known each other, I never thought to ask you what you thought when you heard about his decision. "
" ON Monday, August 16, 1971, the day after President Richard Nixon devalued the dollar, cut taxes, slapped a 10% surtax on tariffs and imposed wage-and-price controls, I was assigned to cover the story for the National Observer, the Dow Jones newsweekly. I called the chief economist of the Office and Management and Budget, Arthur B. Laffer, invited him to lunch, and when we met outside the White House I asked him what he thought was the most important part of the package.
"Closing the gold window," he said without hesitation. "From now on it is not going to be as much fun to be an American." At the lunch, it became clear Laffer was on the losing side of the gold argument inside the Administration. The clearest winner was Treasury Secretary John Connally, who had been persuaded that economic growth required a cheaper dollar on the foreign-exchange market."
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