This is an opinion editorial by Wilbrrr Wrong, Bitcoin pleb and economic history enthusiast.
Aug. 15 marks the anniversary of Richard Nixon’s 1971 decision to sever the link of the U.S. dollar to gold. A recent book by Jeffrey Garten, “Three Days At Camp David[1],” gives an excellent behind-the-scenes look at the process that led to this decision. The ultimate shape of the policy shift was a mixture of Cold War geopolitics, domestic Republican vs. Democrat jockeying and Nixon’s obsession with his 1972 reelection.
In reading about this time period, it’s hard to escape the conclusion that Bretton Woods was a system of control that was predestined to fail due to an inherently poor incentive structure. The rules of Bretton Woods often required politicians and governments to act against their own interests, and impose economic pain on their own people in favor of other nations and international stability. As this system’s tensions came to a head in 1971, peoples’ lives and businesses became subject to the vagaries and competitions of international power politics.
Bitcoin presents a compelling alternative system in which the selfish incentives of actors strengthen the network and monetary policy is known by all. This certainty allows for long-term planning and stability, especially as power politics and questionable government policies continue in the current day.
The Fraying Of The Postwar Order
For all the valid criticisms that are leveled against the Bretton Woods system, it did provide stability in the aftermath of World War II. The U.S. pledge to convert dollars for gold provided confidence for the world to rebuild after the devastation of 1939-1945. During this period American business and technology reigned supreme.
But as 1971 came, all was not well in the free world. Bretton Woods had established a system of fixed exchange
