How Richard Nixon Changed America’s Place in the World

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The thaw was largely Nixon’s job. Connally left the Treasury in 1972, and his successor, George Shultz, often limited himself to making the president’s offer, while favoring floating interest rates. As for Nixon, he didn’t want to destroy Bretton Woods and the gold standard so badly that he couldn’t bother saving them. Garten offers this exchange from White House recordings between the President and chief of staff, HR Haldeman:

Haldeman: Did you hear last night that the British were fluctuating in sterling?

Nixon: No. I don’t think so, do you?

Haldeman: They did.

Nixon: Is this devaluation?

Haldeman: Yes. [White House aide Peter] Flanigan has a report here. …

Nixon: I don’t care. There is nothing we can do about it.

Haldeman: [Federal Reserve Chair] Burns is concerned about speculation on the lira.

Nixon: Well, I don’t care about the lira.

Nixon’s main concern in 1971 was to avoid a recession that could cost him the 1972 election. He compelled Burns to keep rates low in the face of rising consumer prices, and he saw the policy moves that together constituted the “Nixon shock” as a way to take seemingly decisive action against inflation and other economic woes without causing a slowdown. The policy that received the most attention at the time was not the gold decision, but a wage-price freeze, which was initially popular but ultimately ineffective, paving the way for a new inflationary spiral that made it impossible to adhere to any managed exchange rate regime.

Garten isn’t ignoring any of this, which makes his final positive decision a little jarring. Yet he is not necessarily wrong. The attempt to stick to the gold standard in the 1930s has been identified by economists in recent years as the main cause of the depth of the Great Depression, putting the option of abandoning it in the 1970s in a better light. And while many of the decisions that lead to variable odds may seem nearsighted and half-baked, for a seasoned Washington veteran who may be par for the course.

Garten is a veteran Washington veteran who joined the Nixon White House in a small role in 1973, then spent some years in the State Department for Ford and Carter before embarking on a Wall Street career. He returned as undersecretary of commerce in the Clinton administration in the early 1990s and left that job for a successful 10-year run as dean of the Yale School of Management, where he continued to teach. He is now known to the wider world as “Jeffrey”, the recurring character on the long-running Food Network program “The Barefoot Contessa” hosted by his wife. Ina Garten. However, he remains a well-connected, respected honorary member of the financial-political elite.

This perspective steals many of the bites that “Three Days at Camp David” might have had if written by a journalist or traditional academic. But it adds perhaps a useful appreciation for how difficult it is to get things right in government.

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