1971 – the year the USA started going downhill

I’ve posted versions of the chart above several times before.  It shows how American wages once grew along with growth in productivity, and how, around 1971 or so, wage-earners stopped benefitting from being more productive.  This fact about the U.S. economy explains a lot.

I saw an Internet post yesterday consisting of charts showing how many more kinds of things changed for the worse in 1971.  Economic inequality, the cost of living, inflation-adjusted wages—all got worse.

There are too many for me to copy and re-post, but here is a sample.

What happened in 1971?  The only major event I can think of is the Nixon administration’s decision to go off the gold standard.  From then, the U.S. dollar was redeemable not for gold or some other precious metal, but for U.S. Treasury bonds – in other words, IOUs.

Economist Michael Hudson has written books about how this decision allowed financiers and bankers to flourish and the U.S. military to finance its wars while the U.S. manufacturing economy faded away and living standards declined.

As much as I respect Hudson, it’s hard for me to believe that this one thing could have caused changes in so many different things so quickly.  Maybe it’s a tipping point caused by a lot of different things coming together at once.

LINKS

WTF Happened in 1971?   Many, many more charts.

WTF1971 newsletter.

Shadow Government Statistics, including Alternate Inflation Charts, by John Williams. When you look at inflation-adjusted wages and the cost-of-living indexes, keep in mind that he official CPI has been altered a number of times to make the cost of living seem lower and real wages seem higher than they did before the adjustment.  Williams has the statistics compiled the old way.

Tags: 1971, American Decline