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The Nixon shock was the effect of a series of economic measures, including wage and price freezes, surcharges on imports, and the unilateral cancellation of the direct international convertibility of the United States dollar to gold, taken by United States president Richard Nixon on 15 August 1971 in response to increasing inflation.
The Economic Stabilization Act of 1970 (Title II of Pub. L. 91–379, 84 Stat. 799, enacted August 15, 1970, [2] formerly codified at 12 U.S.C. § 1904) was a United States law that authorized the President to stabilize prices, rents, wages, salaries, interest rates, dividends and similar transfers [3] as part of a general program of price controls within the American domestic goods and labor ...
U.S. President Richard Nixon's Secretary of the Treasury, George Shultz, enacting Nixon's "New Economic Policy", lifted price controls that had begun in 1971 (part of the "Nixon Shock"). This lifting of price controls resulted in a rapid increase in prices. Price freezes were re-established five months later. [32]
In the early 1970s, inflation had been much higher than in previous decades, getting above 6% briefly in 1970 and persisting above 4% in 1971. U.S. President Richard Nixon imposed price controls on August 15, 1971. [3] This was a move widely applauded by the public [3] and a number of Keynesian economists. [11]
The Senate votes 53 to 29 in favor of President Nixon having the authority to impose a 15% surcharge on imports into the US. [9] Secretary of the Treasury Connally lauds the wage-price increase as successful and foresees post-freeze controls cutting inflation in half during the following year. [10]
President Richard Nixon. Nixonomics, a portmanteau of the words "Nixon" and "economics", refers either to the performance of the U.S. economy under U.S. President Richard Nixon [1] (i.e. the expansions in 1969 and from 1970 to 1973 during the broader Post–World War II economic expansion and the recessions from 1969 to 1970 and from 1973 to 1975) or the Nixon administration's economic policies.
Prices continued to increase during 1971, and Nixon allowed wage and price guidelines, which Congress had authorized on a stand-by basis, to be implemented. [32] Connally later shied away from his role in recommending the failed wage and price controls, and announced guaranteed loans for the ailing Lockheed aircraft company. [33]
C. Jackson Grayson was the U.S. chairman of the Price Commission in the United States from 1971 to 1973 under President Richard Nixon. [1] In that position under the Economic Stabilization Act of 1970 , Grayson oversaw price controls and the process through which companies request permission to increase prices.