Bitcoiners Ask: ‘WTF Happened In 1971?’ The Answer Might Shape The 2020s
The director of the Fiscal and Budget Policy Project at the non-partisan R Street Institute, Jonathan Bydlak tells Cryptonews.com that the effects of leaving the Bretton Woods Agreement were mostly positive, if mixed.
“The obvious negative immediate result was the impact on the value of the dollar,” he says.
“Many argue that the erosion in its value that has occurred since the early 70s was an inevitable consequence of breaking its tie with gold.”
However, this downside notwithstanding, Bydlak explains that there are a number of other impacts to consider. “One is that since the inflation of the late 70s and early 80s, inflation and the business cycle have both no doubt been steadier than they were in the gold standard era.”
Bydlak admits that there have been financial crises since then. However, he adds that “each of these periods has tended to be milder than panics and recessions from the pre-Bretton Woods era.”
In essence, Bydlak says that the tradeoff in leaving the gold standard was mostly positive: “increased flexibility in using monetary and fiscal policy to respond to economic crises in return for less of a check on the value of the currency.”
