On Sunday, August 15, 1971, President Richard Nixon announced the most important economic event since the invention of money. This will change our economy and our society forever. Namely, the loosening of the gold standard. The advent of the euro and bitcoin, negative savings rates, the working poor, tensions with China, the crisis since 2007 and many more, turn out to be sprouting seeds from 1971; a turning point in our history. Edin Mujagic wrote the book "Turning Point 1971. Today he takes us through his story, the execution and outcome of this action, and most importantly, what we as entrepreneurs can learn from it now and what the future is likely to look like.
Edin Mujagic is chief economist and part of our investment committee. In addition to his work at OHV, Edin has written several books on macroeconomic and monetary history. He is also a popular speaker and author with renowned media outlets. Our clients have the opportunity to discuss developments in the financial markets with Edin. In addition, Edin shares his views on economic developments monthly in his newsletter, "Reflections of a Macroeconomist."
Effect of the turning point
As with so many things in life, the measure taken in 1971 has seen "sweet" and "sour" things happen. "If money is added on a large scale then we can do a lot more things as a government. Much more can be invested. Companies have more money, you and I have more money and we spend that money again. You could say that the sweet spot provides economic growth. The only problem is that it is inevitable that after sweet comes sour. Everything has a price. Every measure you take as a policy maker has a price. In this case, there has been sustained price growth since the 1971 measure. Every year there was inflation."
Wondering how this unnatural fact further affects the economy? And what the economic future looks like? then listen to the latest episode of the Work Professor podcast!
Links
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More about Edin Mujagic
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