Fifty-Five Years of Fiat Failure

What happened in this episode?

Peter Schiff marks the 55th anniversary of President Richard Nixon’s 15 August 1971 decision to halt foreign governments’ ability to redeem US dollars for gold, arguing it amounted to a US “default” that ushered in modern fiat money. Schiff gives a historical account of how, in his telling, 1960s deficits linked to the Great Society, the Vietnam War and other spending pressures led to rising issuance of dollars relative to gold reserves and prompted foreign redemptions, particularly by France. He says Nixon avoided politically difficult options such as fiscal tightening or an official devaluation by instead “closing the gold window”, which he notes never reopened despite subsequent devaluations.

Schiff argues the post-1971 period produced a collapse in purchasing power, pointing to 1970s inflation and stagflation, and he links the era to social and labour-market changes he attributes to declining real wages and rising household financial strain. He contends that the dollar retained reserve-currency status but that the lack of a gold constraint enabled larger deficits, credit growth and a shift from manufacturing towards consumption, alongside expanding trade and national-debt burdens. Schiff closes by predicting the US is nearing a more severe inflationary episode and that the world will eventually move away from a “dollar standard”. The episode ends with a sales pitch encouraging listeners to buy gold, which is promotional rather than evidential support for his claims.

What are the key points?

• Schiff recounts Nixon’s 1971 suspension of foreign dollar-to-gold convertibility and calls it an effective default.
• He argues 1960s US deficits and Federal Reserve monetisation drove foreign redemptions of US gold, especially by France.
• He says the ‘temporary’ closure became permanent after devaluations raised the official gold price to $42.22 by 1973.
• Schiff attributes 1970s inflation and stagflation to the end of gold backing, citing sharp rises in gold and oil prices.
• He claims the post-gold era enabled larger US borrowing, deindustrialisation and persistent trade deficits.
• He warns of an impending ‘inflationary collapse’ and predicts the world will move off a ‘dollar standard’.
• The episode concludes with a promotional call to contact Schiff’s gold business to exchange ‘fiat money’ for gold.

Which topics are covered?

How is this page sourced?

Programme

The Peter Schiff Show

Published

15 August 2026

Duration

12m

Original episode

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