The Nixon Shock: Martin’s Fed vs. The World (Part 2)

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The Nixon Shock: Martin’s Fed vs. The World (Part 2)

Daniel Gamboa

and

Matt Harris

Aug 14, 2025

Transcript

On the journey towards President Nixon’s fateful decision on August 15th, 1971 to suspend dollar-gold convertibility—a decision that would forever change the global economy—we meet William McChesney Martin Jr, the longest-serving Fed chairman in history and arguably the most consequential economic US policy maker since Alexander Hamilton.

After negotiating Fed independence as an Assistant Treasury Secretary with the 1951 Fed-Treasury Accord, President Truman appointed Martin as chairman of the Fed. For two decades, Martin fought to establish Fed independence while pursuing the long-term interests of the US—fighting inflation, defending the dollar, and facing off against five presidents.

While he navigated the demands of a booming economy at home, Martin coordinated with US allies to stabilize exchange rates and grow world trade—all while balancing the needs of Cold War military spending, allied foreign aid, and private capital outflows.

We trace the mounting pressure from the late 1950s gold spike through Vietnam-era deficits as Martin tries to hold the line with rate hikes, diplomacy, and sheer credibility among global central bankers. It’s the story of a principled broker navigating guns-and-butter politics while the world loses faith in dollar-gold convertibility—and according to his own assessment, he was almost successful too… almost.