Flight From The Dollar

Summary of Flight From The Dollar

The large-scale divestiture of dollars and dollar-denominated securities by speculators and capital markets in 1970- 1971 in anticipation of a dollar devaluation. Pessimism concerning the dollar arose in response to growing balance of trade deficits and capital outflows attributable to low U.S. interest rates. The conversion of U.S. dollars into gold by foreign governments exacerbated concerns. In August 1971 President Richard Nixon suspended official conversions of dollars for gold; this act was followed by two devaluations of the dollar.

(Main Author: William J. Miller)