Almost forty years ago...

PBS: Are we slaves to debt? David Graeber on the history of spending more than we have

Almost forty years ago, on August 15, 1971 President Nixon took America off the gold standard, declaring, “We must protect the position of the American dollar as a pillar of monetary stability around the world” — which meant, among other things, that there were really no longer boundaries on the amount of money that could be printed.

 

The interview statement suggests by innuendo that if we look, we will find an unbounded increase in the quantity of money after 15 August 1971.

I will look.

Graph #1: Base Money (Log Scale)
No change related to 15 August 1971

Graph #2: M1 Money (Log Scale)
No change related to 15 August 1971

Graph #3: M2 Money (Log Scale)
No apparent change related to 15 August 1971

Graph #4: M3 Money (Log Scale)
No apparent change related to 15 August 1971

Graph #5: MZM Money (Log Scale)
No change related to 15 August 1971

Graph #6: Total Credit Market Debt Owed (Log Scale)
Possible 15-year increase following 15 August 1971

Only one of these graphs offers even a hint of increased growth, after President Nixon took America off the gold standard -- the graph of total credit market debt, or TCMDO. Of course, TCMDO is the "near money" that is furthest from money, least subject to control by the Federal Reserve, and most responsive to private sector financial decisions. TCMDO increases not by printing money but by lending it.

If you think you see a hint of post-1971 increased growth in Graph #4, let me point out that M3 is the next most distant "near money" after TCMDO. Again, it is not the money-printing that the government did, but money-lending within the private sector, which caused the change that you see.

A colorful look at the yearly change in all the monies and near-monies shown on the graphs above:

Graph #7: Percent Change from Year Ago for
the series shown in Graphs #1 through #6

All in all these trends may show a general increase from the early 1950s to the mid-1970s, followed by stabilization or downtrend to the most recent years shown. All in all, no well-defined increase following 15 August 1971.

The PBS intro's focus on printing money is the wrong focus. There was no acceleration of money-printing following President Nixon's decision of 15 August 1971. The problem is *NOT* that "there were really no longer boundaries on the amount of money that could be printed."