In an address on August 15 1971, President Richard Nixon called for a New Economic Policy for the United States. The speech was called “The Challenge of Peace.” In that speech, Nixon would signal a significant shift in US economic policy that would have implications for the world economy. In the speech, Nixon offered an encouraging outlook for the post-Vietnam-war world based in two ideals; a full generation of peace, and to create a new prosperity without war in the US. These ideals were to be achieved through implementing a “New Economic Plan” that prioritized job growth, stable living costs, and the protection of the US dollar from international money speculators. Also commonly known as “Nixon Shock,” this unilateral policy change shook the global economy with both abrupt and lasting impacts on international economic relations. These included but aren’t limited to the end of the Bretton Woods system and the 1973 oil embargo against the U.S. Most significantly, it triggered the end of America’s hegemony over the world …show more content…
dollars that had been occurring since the 1960’s. That surplus was attributed to the massive amounts of foreign aid, investment, and military spending from the Vietnam War. At the time, this threatened the Bretton Woods system of international financial exchange created after WWII because the U.S. didn’t have enough gold to cover the dollars in worldwide circulation. Therefore, the dollar was overvalued which resulted in speculators selling U.S. dollars. Nixon noted that these international money speculators thrive on monetary crises and help create them, and are therefore “waging an all-out war on the American dollar” to the detriment of the workingman and investors. As such, Nixon suspended the convertibility of the dollar into gold. Thus, the Bretton Woods system became inoperative, triggering a new global economic