Those who try to chart the course of our credit downgrade will blame Barack Obama’s profligacy or Republicans’ brinksmanship, or maybe even Standard & Poor’s callousness. But these can be no more than ancillary factors. The rejection of America as a top-tier credit is the outcome of a commitment broken 40 years ago that we have never figured out how to live with: money with no guaranteed value.
On Aug. 15, 1971, President Richard Nixon announced a stunning reversal in American economic policy. Dollars held by foreign governments and central banks would no longer be redeemed with gold. The Bretton Woods monetary system, devised by the free world near the end of World War II, was finished.
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