In 1973, the US monetary and financial system changed as the United States officially abandoned the gold standard for setting the value of US dollar, making it a free-floating fiat currency. This was part of the Nixon Shock, that started in 1971.
Explanation:
Nixon Shock is the colloquial name for the decision of President Richard Nixon, de-facto issued on August 15, 1971 and officially confirmed in 1973, which abolished the previous convertibility of the US dollar against gold. It repealed the Bretton Woods system, which fixed exchange rates between the world's leading currencies within limited parameters, therefore enabling "floating" exchange rates that have become a feature of the world economy to this day.
Nixon's decision was prompted by a sharp rise in US public debt caused in the previous decade by the unforeseen high costs of the Vietnam War and the so-called extensive social programs. Nixon's shock enabled the devaluation of the dollar and had positive effects on the American economy in the short term.
