Richard Nixon on Budget & Economy President of the U.S., 1968-1974

1971: I am now a Keynesian in economics: gov't creates jobs

(In fact, Nixon didn't actually say this. He said, "I am now a Keynesian.")

By then even a conservative like Nixon had accepted government's ability to keep people employed, to fill in the breach when consumers and businesses did not spend enough. Even this wasn't precisely accurate. In a commentary appearing in the Feb. 4, 1966 edition of Time, Friedman clarified that he had actually said, "In one sense we are all Keynesians now; in another, nobody any longer is a

1971: "We are all Keynesians now"; end the gold standard

In addition, wage and price controls were put in place, along with a 10% import tariff. Instead of the markets collapsing, the move was immediately praised by the Chamber of Commerce, and the stock market soared.

This was the third broken promise by our government regarding gold backing to our dollar. Lincoln did it in the Civil War, and FDR did it in 1933 when he confiscated gold from the American people and made it illegal for American citizens to own gold.

In 1971, the shift to a new monetary regime was an unprecedented experiment in global monetary planning, a wholesale plunge into the world of paper currency. With no backing for the dollar at all, Americans became completely reliant on the Federal Reserve to manage our money and to do so without any outside discipline

1971: We are all Keynesians now: spend during recession

1971: Delink gold; float dollar; 10% import tariff

In August of 1971, Nixon slammed shut the gold window, cancelled the U.S. commitment to redeem dollars for gold, let the dollar float, and imposed a 10 percent across-the-board-tariff. "Nixon shock!" said the stunned Japanese.

The dam broke. After the dollar was cut loose from gold, the price of gold shot to as high as $800 an ounce in a decade. Bretton Woods was dead. Speculators who had bet against the dollar and against the American credibility in defending its currency were hugely rewarded.

Address deficit through spending cuts, not tax increases

1971 price & wage freeze helped only for the short-term

Over my protests, an opposition-controlled Congress had given me power to impose controls. With inflation worsening, there was a swelling chorus of demands in Congress and the media that the power be used.

When controls were imposed in August 1971 the nation stirred with excitement and sighed with relief. In the first day's trading, the Dow Jones average on Wall Street rose 33 points. But it was a false euphoria. In the short term, controls provided relief; in the long term, they made the situation worse. Once in place, they were more difficult to get rid of in an orderly way than I had expected.

Government under Republicans costs less

Expanding programs while reducing debt will increase taxes

I think you have heavy obligations which affect our security, which we're going to have to meet.

NIXON: I think that it should be pointed out that of course it is not possible, particularly under the proposals that Senator Kennedy has advocated, either to cut the national debt or to reduce taxes. As a matter of fact it will be necessary to raise taxes.