[somenameforme]

The USD was a 'commodity currency' up until 1971 thanks to Bretton Woods. It was convertible to gold at a fixed rate, and other currencies were, in turn, pegged to the USD. The idea was to have the stability/security of a backed currency, with the convenience of a fiat one. The security was intended to come from the fact that if the US printed too many dollars, devaluing the USD, then other countries would buy up those dollars and convert them to gold - both making profit, and punishing poor fiscal behavior.

It was a self-protecting system. The problem is it assumed the US would keep to its word. Instead we got everybody hooked on the USD, started printing a bunch of money anyhow, and then just defaulted on our obligations when other countries tried to convert it to gold, and withdrew from Bretton Woods. This led to the famous quote from Nixon's Treasury Secretary: "The dollar is our currency, but your problem."

So you're only looking from 1971 onward. This not only doesn't look especially pretty [1] in countless sociopolitical aspects, but the tremendous economic gains we have seen can also be largely attributed to a complete tech explosion that reshaped the entire world's economy, which we ended up being the natural epicenter of owing to a relatively large population, English being the defacto global language of science, and the fact that we were left entirely untouched by WW2.

The current completely free floating global fiat experiment may end up being the shortest lived economic experiment in our entire history should it turn out that we're just blowing up the mother of all bubbles. And it sure does feel that way!

[1] - https://wtfhappenedin1971.com/

[adastra22]

https://www.reddit.com/r/AskHistorians/comments/y6p7mh/wtf_h...

Top answer here is good.

Sorry someone posting a link to the absolutely insane conspiracy-tinged 1971 site gets an auto-ignore from me. Have a good life.

[somenameforme]

Hahah, I can see you now furiously searching for 'wtfhappenedin1971 debunked.' Of course there is no debunking it as the site's just a collection of data, primarily from the US government. The data just happens to be quite inconvenient for pro inflation economic arguments.

I actually used to be of the same mindset as yourself, but it increasingly seems to me that the general preference for inflation based economics is much more of a status quo bias than something as strongly supported by data as one would think. There's also a simple logical problem you run into. When you give government the power to freely print infinite money, who do you think they're going to disproportionately direct that money towards?

Recent times actually provide one of the clear illustrations of the problem. Mega corporations take on multi billion dollar contracts from the government at way beyond market rate markups, then the moment the economic weather shifts even slightly they start large layoffs. The reason is not because the integrity of the company is threatened or anything of the sort, but simply to continue maximizing value for shareholders. It's not hard to see how with monopoly money economics you start an exponential increase in many things, like income inequality.