Aspiring Republican politicians and conservative opinionators love talking in darkened tones about the malevolence of elites. And yet, for all the fingers wagged and pixels rendered, conservatives have largely ignored the most economically significant way in which elites actually have rigged the game in their favor. The widening gap between elites and the rest of us comes down in large part to the highly abnormal way in which the United States has defined money for the last 50 years.

Our story begins when Richard Nixon—self-styled tribune of the "silent majority"—tore up the Bretton Woods agreement that had linked the value of the U.S. dollar to the price of gold. In 1944, the Allies had all agreed to fix their own currencies' exchange rates to the U.S. dollar, based on the American promise that the greenback would maintain its peg to the value of 1/35th of an ounce of gold.

The problem for Nixon was that, by 1971, the rest of the industrialized world held $64 billion worth of claims on the $10 billion of gold that the U.S. actually held. Nixon solved this problem in banana republic fashion, abruptly prohibiting foreign countries from redeeming their dollars for gold and, eventually, abandoning the dollar-to-gold peg altogether.

For a period of time, this tactic appeared successful. Nixon got reelected in a landslide in 1972. But within eight years, the dollar's value in gold terms had declined by 95%, and the greenback's purchasing power, as measured by the Consumer Price Index, had been cut in half.

WTF Happened?