Ray Dalio Explains the Day the US Ran Out of Money

On August 15, 1971, the United States faced a significant economic crisis. The country's gold reserves were depleted, forcing President Nixon to announce that the US would no longer convert dollars to gold. This decision, explained in a recent video by Ray Dalio, had a surprising impact on the stock market, which rose instead of plummeting. Dalio's video highlights the historical context, explaining that this wasn't an isolated event. In 1933, a similar situation occurred under President Roosevelt, with comparable results. Dalio states, "I expected the stock market to plunge, but it went on to rise nearly 25%. That surprised me." This unexpected market behavior, Dalio explains, stemmed from the decoupling of the dollar from gold, allowing the US to continue spending beyond its earnings. The video effectively uses visuals and historical footage to make complex economic concepts accessible to a broader audience. This historical event serves as a reminder of the intricate relationship between currency, gold reserves, and market dynamics.