On August 15, 1971, President Nixon decreed that the US dollar would no longer be redeemable for the gold owed, even to foreign governments. This bad decision is the latter, a desperate attempt to avoid the consequences of previous bad decisions.

Tricky Dicky's Catastrophe

Richard "Tricky Dicky" Nixon decided, with advice from Milton "Free to Choose" Friedman, to end gold convertibility. He claimed it was just temporary, but his decree was a dishonorable default on the obligations of the US government.

My God, I wish that we the people did not grant such power to the government!

The Power to debauch the money is the Power of the One Ring. How can people not see this? Those who, like Boromir, would use it "to make us stronger", or like Boromir's father Denethor "only in the utmost end of need", are deluding themselves. As Gandalf explains to Frodo, this Power has no good uses.

No, Boromir, it does not make the economy stronger. No, Denethor, it does not stimulate recovery.

A Brief History of the Bad Decisions that lead to Nixon's Really Bad Decision

Nixon's bad policy decision came after a long series of bad policy decisions, going back to 1792. The Coinage Act of that year fixed the price of silver to gold, in a ratio of 15 units of silver to 1 unit of gold. However, in world markets, the ratio was closer to 15.5 to 1. Fixing silver to gold at a lower ratio means gold was cheaper, in silver terms. The law overvalued silver as American money and bank deposits, giving free purchasing power to holders of silver.