first time, the United Nations has acknowledged its own involvement in a devastating cholera outbreak in Haiti in 2010 that killed at least 10,000 people.
The UN has always disputed claims that Nepalese peacekeepers brought cholera to the island nine months after an earthquake struck Haiti, the first known appearance of the disease there in over 150 years.
Cholera is an acute gastrointestinal illness caused by ingesting food or drink contaminated with Vibrio cholerae bacteria. It can cause severe diarrhea and vomiting, which leads to extreme dehydration. Patients who are not treated quickly to restore lost fluids can die within hours. According to the US Centers for Disease Control and Prevention, there are 3 million to 5 million cases of the illness every year worldwide and 100,000 deaths.
After a leak Thursday to the New York Times of a scathing report by a UN investigator, UN Deputy Spokesman Farhan Haq told CNN that "over the past year, the UN has become convinced that it needs to do much more regarding its own involvement in the initial outbreak and the suffering of those affected by cholera." The UN says it is considering several options.
The draft report the New York Times obtained, prepared by Special Rapporteur on extreme poverty and human rights Philip Alston and commissioned by the UN, says the epidemic "would not have broken out but for the actions of the United Nations."
The UN is not saying that it caused the epidemic.
It can choose to accept the findings of the report or adjust the findings after discussions with Haiti and other member countries. The final version will be presented to the United Nations within two months.
"We're trying to figure out how to resolve this," Haq said Thursday, "figuring out how to do the right thing."
Reports have claimed that poor sanitation at a UN peacekeeper camp allowed sewage to seep into a river.
When asked whether the UN was saying for the first time that it was responsible for the outbreak, Haq said, "I don't have anything to say about that."
Deputy Secretary-General Jan Eliasson said on CNN's "Amanpour" on Thursday that the UN is seeking to combine "an element of compassion" with the organization's strict legal position on immunity for actions of peacekeepers.
Secretary-General Ban Ki-Moon has instructed aides to work out a solution, he said, and "we expect UN member states to accept moral responsibility" for the outbreak.
In the past, UN member countries have feared heavy financial obligations for Haiti and other cases that could arise around the world.
Activists fighting for justice for the Haitian victims were overjoyed at the possibility that the UN was changing its position. Beatrice Lindstrom of the Institute for Justice and Democracy in Haiti said, "this is a groundbreaking first step for justice."
However, Lindstrom added, "the real test is what comes next. Promises will not stop cholera's killing or compensate for the damage to poor families in Haiti." She wants a public apology from the UN and a plan to compensate victims.
US Sen. Ed Markey, a member of the Foreign Relations Committee, said the acknowledgment is "an important first step in reinstating trust with the Haitian and global community." He called on the UN to "support the development of solutions that prevent disease transmission and provide treatment for the thousands of people suffering from this deadly scourge."
Several lawsuits have been filed on behalf of the victims. But the UN never budged from its denial of involvement in the deaths.
A class-action lawsuit in a Brooklyn federal court blames the UN for the spread of the disease. Haq said Thursday that the UN's legal position has not changed.
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At one point in the long-running saga, Ban was served on a New York sidewalk with legal papers regarding the case.
The UN says it has been involved since 2010 in trying to eradicate cholera in Haiti.
However, five special investigators for the UN chastised Ban this year, saying he undermined the credibility of the organization by denying responsibility for the cholera outbreak.
(CNN)Hillary and Bill Clinton's ties to two influential Lebanese-Nigerian businessmen are raising fresh questions about whether the State Department showed favoritism to Clinton Foundation donors -- an issue that has continued to dog the Democratic nominee during the 2016 presidential contest.
Newly released documents, obtained by the conservative watchdog group Citizens United and provided to CNN, show the State Department was interested in purchasing land for a new US consulate in a development called Eko Atlantic on the coast of Lagos in 2013, in a story first reported on by Fox News. The development is managed by Ronald Chagoury and funded by an umbrella company owned by him and his brother Gilbert Chagoury.
Responding to the report, the State Department said this week that the land was considered but not acquired.
Clinton had left the State Department before it sent a letter three years ago expressing interest in possibly buying the property. While the letter was sent after she had left office, the State Department had identified the Eko project as a potential location when Clinton was still secretary of state in 2012. Asked if Clinton was cognizant of that, a department spokeswoman said earlier this week, "I'm not aware she was."
"You know we've not, as of today, contracted or acquired any property for a new consulate in Lagos," State Department spokesman Mark Toner told reporters Wednesday. "We have over the past couple of years identified, and looked at, and evaluated multiple properties. We've had conversations about multiple properties with their property owners and their representatives because we are looking, as we've noted, to acquire property for a new consulate in Lagos. And this process is in no way connected to or subject to individual preferences or pressure ... it's managed by career real estate industry professionals."
But the Clinton Foundation's ties to Gilbert Chagoury and Eko Atlantic have led critics to allege the development was given special consideration.
Gilbert Chagoury has donated over $1 million to the Clinton Foundation, according to the foundation's website, which also notes that The Chagoury Group -- run by the brothers -- pledged to commit $1 billion to fight coastal erosion through the Eko Atlantic development as part of a Clinton Foundation initiative on climate change. Eko Atlantic is built on reclaimed land protected by a sea wall.
Bill Clinton attended the project's dedication ceremony in 2013 and was photographed with the Chagoury brothers, and he appears in Eko Atlantic promotional videos.
"Another week and another example of Clinton-Chagoury corruption," Citizens United President David N. Bossie told CNN in a statement. "A month after Bill Clinton visits a Gilbert and Ronald Chagoury-run land project in Nigeria, the U.S. State Department wants to buy the same land. Who could be so lucky? A major donor to the Clinton Foundation, that's who."
Brian Fallon, a spokesman for the Clinton campaign, said, "Citizens United is a right-wing group that's been attacking the Clintons since the 1990s and, once again, is trying to make something out of nothing. This draft letter was written after Hillary Clinton had already left the State Department and it never led to any deal."
Mark Corallo, a spokesman for Gilbert Chagoury, told CNN in a statement, that "Eko Atlantic was just one of several locations being explored by the United States for its new consular facilities in Lagos."
He continued, "Considering its size, modern infrastructure, technology and security, it should come as no surprise that the United States government and other governments from around the world are considering Eko Atlantic."
This isn't the first time the State Department has faced questions about the Chagourys.
Last week, documents released by the conservative legal watchdog group Judicial Watch revealed a top Clinton Foundation official had asked two Hillary Clinton aides at the State Department to put Gilbert Chagoury in contact with the department's "substance person" on Lebanon. Emails were exchanged, but a meeting never took place.
The Clinton Foundation has become a lightning rod for criticism in the presidential race.
On Tuesday, The Boston Globe published an editorial calling for the foundation to "remove a political -- and actual -- distraction and stop accepting funding."
And former Democratic Pennsylvania Gov. Ed Rendell, a Clinton supporter, told The New York Daily News over the weekend the foundation should be disbanded if she's elected.
"I definitely think if she wins the presidency, they have to disband it. I know it'll be hard for President (Bill) Clinton because he cares very deeply about what the foundation has done," Rendell said. "It'd be impossible to keep the foundation open without at least the appearance of a problem."
A US official also told CNN last week that the FBI and Department of Justice met several months ago to discuss opening a public corruption case into the Clinton Foundation, after the FBI received notification from a bank of suspicious activity from a foreigner who had donated to the foundation.
Clinton has yet to address the future of the foundation or her husband's role in it should she win the White House. At a CNN town hall in June, she told Anderson Cooper, "We'll cross that bridge if and when we come to it."
CASH is one of mankind’s greatest inventions; a vast improvement, one would imagine, on carting around sheep or bales of hay. Despite the proliferation of other forms of payment, cash retains qualities that alternative methods cannot match, including anonymity, instant clearing, universal acceptance and a relatively tech-free mechanism. It can be used even if the power grid goes down or the banks are all hacked. Yet a growing number of economists are now calling for cash to be phased out. Why?
In “The Curse of Cash”, published on August 16th, Kenneth Rogoff makes the case for gradually getting rid of most paper currency. It certainly has benefits, he admits, but these are outweighed by the costs associated with its murky side. Take anonymity. The same virtue that provides the ability to pay for a self-indulgent treat or a naughty service without its appearing on bank records or credit-card statements also allows criminals to fund their activities and tax-dodgers to avoid levies. The record $1.4 trillion circulating outside of banks in dollars alone, mostly in high-denomination bills, might suggest that every four-person American family has $13,600 in $100 bills stashed in a jam jar. That is unlikely. According to Mr Rogoff, the bulk of the rich world’s currency supply is used to facilitate tax evasion and illegal activities such as human trafficking and financing terrorism. A cashless world would also make monetary policy more effective, argue some, including Mr Rogoff, because savers would no longer be able to stuff cash under mattresses in case of negative rates. And as shopkeepers and businesses in relatively cash-light countries such as Sweden are discovering, there are other real benefits to preferring electronic payments over cash, including security, lower costs, hygiene and convenience, for both business and customer.
Moving away from cash would not be without complications. Some objections can be easily dismissed, such as a claim expressed by a fifth of a sample of Germans, who said in a recent survey that they like the feel of carrying cash. But other problems are harder to pooh-pooh. The most intractable are the loss of anonymity and the risk that parts of society will be left out of the financial system, in a world where smartphones and plastic become the only ways to pay. The anonymity problem can in part be solved by retaining smaller notes and coins; enough for punters to keep buying porn, weed and birthday presents, but not so much as to buy property. The point about financial exclusion is trickier. In a near-cashless world vulnerable groups, such as the poor, the elderly and migrants, could become further marginalised, and those who are especially cash-dependent for income, such as churches, charities and the homeless, could expect to see a drop in their incomes. But changes can be made gradually and intelligently, for example by paying benefits on prepaid debit cards and supplying charities with contactless card machines. The switch could in fact increase financial inclusion, by ensuring that the unbanked become banked.
The debate elicits strong reactions; Bild, a German newspaper, recently organised a reader protest against a €5,000 ($5,633) limit on cash transactions. And German academics have argued that banning cash won’t magically end crime and black-market dealings: electronic fraud, cyber-crime and anonymous payments online are easy enough for those with skill and determination. Yet as countries in the rich world grow increasingly detached from cash, with some shops and cafes flat-out refusing to accept the stuff, economists can already see early evidence of the benefits of going cashless—as well as the relatively painless nature of the transition.
Donald Trump was in a state of shock: He had just fired his campaign manager and was watching the man discuss his dismissal at length on CNN. The rattled candidate’s advisers and family seized the moment for an intervention.
Joined by his daughter Ivanka and her husband, Jared Kushner, a cluster of Mr. Trump’s confidants pleaded with him to make that day — June 20 — a turning point.
He would have to stick to a teleprompter and end his freestyle digressions and insults, like his repeated attacks on a Hispanic federal judge. Paul Manafort, Mr. Trump’s campaign chairman, and Gov. Chris Christie of New Jersey argued that Mr. Trump had an effective message, if only he would deliver it. For now, the campaign’s polling showed, too many voters described him in two words: “unqualified” and “racist.”
Mr. Trump bowed to his team’s entreaties, according to four people with detailed knowledge of the meeting, who described it on the condition of anonymity. It was time, he agreed, to get on track.
Nearly two months later, the effort to save Mr. Trump from himself has plainly failed. He has repeatedly signaled to his advisers and allies his willingness to change and adapt, but has grown only more volatile and prone to provocation since then, clashing with a Gold Star family, making comments that have been seen as inciting violence and linking his political opponents to terrorism.
Advisers who once hoped a Pygmalion-like transformation would refashion a crudely effective political showman into a plausible American president now increasingly concede that Mr. Trump may be beyond coaching. He has ignored their pleas and counsel as his poll numbers have dropped, boasting to friends about the size of his crowds and maintaining that he can read surveys better than the professionals.
In private, Mr. Trump’s mood is often sullen and erratic, his associates say. He veers from barking at members of his staff to grumbling about how he was better off following his own instincts during the primaries and suggesting he should not have heeded their calls for change.
He broods about his souring relationship with the news media, calling Mr. Manafort several times a day to talk about specific stories. Occasionally, Mr. Trump blows off steam in bursts of boyish exuberance: At the end of a fund-raiser on Long Island last week, he playfully buzzed the crowd twice with his helicopter.
But in interviews with more than 20 Republicans who are close to Mr. Trump or in communication with his campaign, many of whom insisted on anonymity to avoid clashing with him, they described their nominee as exhausted, frustrated and still bewildered by fine points of the political process and why his incendiary approach seems to be sputtering.
He is routinely preoccupied with perceived slights, for example raging to aides after Senator Marco Rubio of Florida, in his re-election announcement, said he would stand up to the next president regardless of party. In a visit to Capitol Hill in early July, Mr. Trump bickered with two Republican senators who had not endorsed him; he needled Representative Peter T. King of New York for having taken donations from him over the years only to criticize him on television now.
And Mr. Trump has begun to acknowledge to associates and even in public that he might lose. In an interview on CNBC on Thursday, he said he was prepared to face defeat.
“I’ll just keep doing the same thing I’m doing right now,” he said. “And at the end, it’s either going to work, or I’m going to, you know, I’m going to have a very, very nice, long vacation.”
Jason Miller, a spokesman for Mr. Trump, said the Republican nominee was still determined to win, and dismissed accounts that he was downcast. Mr. Miller pointed to the crowds Mr. Trump attracts as a sign of strength.
“Behind the scenes we have a very motivated and very focused candidate in Donald Trump, who knows what he needs to do to win this race,” Mr. Miller said.
People around Mr. Trump and his operation say they are not ready to abandon hope of a turnaround. But he is in a dire predicament, Republicans say, because he is profoundly uncomfortable in the role of a typical general election candidate, disoriented by the crosscurrents he must now navigate and still relying impulsively on a pugilistic formula that guided him to the nomination.
His advisers are still convinced of the basic potency of a sales pitch about economic growth and a shake-up in Washington, and they aspire to compete in as many as 21 states, despite Mr. Trump’s perilous standing in the four states — Florida, Ohio, Pennsylvania and North Carolina — likely to decide the election.
Charles R. Black Jr., an influential Republican lobbyist supporting Mr. Trump, said the campaign was in a continuing struggle to tame him.
“He has three or four good days and then makes another gaffe,” Mr. Black said. “Hopefully, he can have some more good days.” Of Mr. Trump’s advisers, Mr. Black said, “They think he is making progress in terms of being able to make set speeches and not take the bait on every attack somebody makes on him.”
Mr. Trump’s advisers now hope to steady him by pairing him on the trail with familiar, more seasoned figures — people he views as peers and enjoys spending time with, like former Mayor Rudolph W. Giuliani of New York and former Gov. Mike Huckabee of Arkansas.
Mr. Giuliani, who campaigned with Mr. Trump early in the week, said he did not see the candidate as unmoored or unhappy. If anyone was disconcerted, Mr. Giuliani suggested, it was the people steering his campaign.
“He doesn’t seem to be as unnerved by these things that go wrong as the people around him,” Mr. Giuliani said. Still, he allowed, “I think it is true that maybe it took him a little while to realize that we’re moving from a primary campaign to a presidential campaign.”
Mr. Trump, he said, had become “a little bit more realizing there are certain days left and you’ve got to get messages out on those days.”
Even before Mr. Trump’s most recent spate of incendiary comments, Republicans who dealt with him after the primaries came away alarmed by his obvious unease as the de facto party leader. After a meeting in late May between Mr. Trump and Karl Rove, the architect of George W. Bush’s presidential victories, Mr. Rove told associates he was stunned by Mr. Trump’s poor grasp of campaign basics, including how to map out a schedule and use data to reach voters.
n apartment of a mutual friend, the casino magnate Steve Wynn, Mr. Trump said he would compete in states like Oregon, which has not voted Republican since Ronald Reagan’s 1984 landslide. Mr. Rove later told people he believed Mr. Trump was confused and scared in anticipation of the general election, according to people who have heard Mr. Rove’s account.
A few weeks later, when Governor Christie brokered a meeting at Trump Tower between Mr. Trump and governors from around the country, Mr. Trump offered a desultory performance, bragging about his poll numbers, listening passively as the governors talked about their states and then sending them on their way.
Mr. Trump never asked them for their support, three people briefed on the meeting said.
With donors, Mr. Trump has been an indifferent ambassador for his campaign. He has resisted making fund-raising calls and, during at least two major events in July, in New York and Chicago, burned valuable hours with potential contributors by asking them to go around the room, one by one, giving him their thoughts on whom he should pick as his running mate.
That left little time for the donors to query Mr. Trump about policy or strategy, or for him to reassure them about his campaign. Jay Bergman, an Illinois oil executive who attended the event in Chicago, said he wondered if Mr. Trump had taken that approach “to avoid answering questions.”
On matters of policy, too, Mr. Trump has engaged only fleetingly, and idiosyncratically. Before delivering a policy speech in Detroit on Monday, he delegated the formation of an economic plan to a few conservative economists outside his campaign, who consulted him from time to time and ultimately haggled over the details in his office as he followed their conversation.
Stephen Moore, a Heritage Foundation fellow, said he and Arthur Laffer, the supply-side economist, had tangled over the top tax bracket while Mr. Trump observed from behind his desk, eventually siding with Mr. Moore. Mr. Trump, he said, also expressed strong views about the taxation of interest on business loans, citing his experience as a developer.
“He’s a typical businessman, right?” Mr. Moore said. “He lets people argue it out, and Arthur made his case and others made their case.”
“He’s not the world’s expert on the tax code,” Mr. Moore added, “but he has very good intuition about how these things will affect real people.”
At the last minute, Mr. Trump interjected to direct his advisers to incorporate a tax deduction for the cost of child care in his economic plan. The issue, which Mr. Trump had not discussed on the campaign trail, is a favorite of his daughter Ivanka.
Mr. Trump’s reliance on his family has only grown more pronounced. Mr. Kushner, Mr. Trump’s son-in-law, who has no background in politics, has expanded his role: He now has broad oversight over areas including the campaign’s budget, messaging and strategy, with the power to approve spending. Mr. Trump has also continued to seek advice from Corey Lewandowski, the campaign manager whom Mr. Trump ousted in June at his children’s urging.
Efforts to bring in high-profile, experienced hands have been fruitless. Mr. Kushner had suggested enlisting Steve Schmidt, Senator John McCain’s 2008 presidential campaign manager, but despite having met once with Mr. Trump during the primaries and speaking with him a few times, Mr. Schmidt never signed on.
Mr. Trump’s advisers believe he is nearly out of time to right his campaign. On Tuesday, hours before his explosive comment about “Second Amendment people” taking action if Mrs. Clinton is elected, his brain trust reassembled again at Trump Tower in a reprise of their stern meeting in June.
They again urged Mr. Trump to adjust his tone and comportment. The top pollster, Tony Fabrizio, gave an unvarnished assessment, warning that Mr. Trump’s numbers would only move in one direction, absent a major change.
Mr. Trump, people briefed on the meeting said, digested the advice and responded receptively.
China said it had launched the world’s first quantum satellite on Tuesday, a project Beijing hopes will enable it to build a coveted “hack-proof” communications system with potentially significant military and commercial applications.
Xinhua, Beijing’s official news service, said Micius, a 600kg satellite that is nicknamed after an ancient Chinese philosopher, “roared into the dark sky” over the Gobi Desert at 1.40am local time, carried by a Long March-2D rocket.
“The satellite’s two-year mission will be to develop “hack-proof” quantum communications allowing users to send messages securely and at speeds faster than light,” Xinhua reported.
The Quantum Experiments at Space Scale, or Quess, satellite program is part of an ambitious space programme that has accelerated since Xi Jinping became Communist party chief in late 2012.
“There’s been a race to produce a quantum satellite, and it is very likely that China is going to win that race,” Nicolas Gisin, a professor and quantum physicist at the University of Geneva, told the Wall Street Journal. “It shows again China’s ability to commit to large and ambitious projects and to realise them.”
The satellite launched in the early hours of Tuesday will be tasked with sending secure messages between Beijing and Urumqi, the capital of Xinjiang, a sprawling region of deserts and snow-capped mountains in China’s extreme west.
Highly complex attempts to build such a “hack-proof” communications network are based on the scientific principle of entanglement.
According to this theory, two particles become “entangled” when they interact. However, any subsequent interaction impacts on both particles. “It is hence impossible to wiretap, intercept or crack the information transmitted through it,” Xinhua reported after Tuesday’s launch.
Speaking to Nature magazine earlier this year, the Chinese physicist in charge of the project, Pan Jianwei, said the launch would push the boundaries of scientific knowledge. “[But] if you want to explore new physics, you must push the limit.”
“I think China has an obligation not just to do something for ourselves – many other countries have been to the moon, have done manned spaceflight – but to explore something unknown,” added Pan, from the Chinese Academy of Sciences.
After Tuesday’s launch Pan told Xinhua the mission marked “a transition in China’s role ... from a follower in classic information technology (IT) development to one of the leaders guiding future IT achievements”.
Beijing’s official news agency said there were “enormous prospects” for the use of such technology in fields including defence, military and finance.
US Republican presidential nominee Donald Trump has said that he would enact "extreme vetting" of immigrants.
In a speech in Ohio, the candidate outlined his plans to combat Islamic extremism, including a new screening test for arrivals to the US.
Applicants will be tested to determine if they share Western liberal values like LGBT and religious tolerance.
Democratic rival Hillary Clinton poured scorn on his plan, labelling it a "cynical ploy".
"This so-called 'policy' cannot be taken seriously," said her spokesman.
"How can Trump put this forward with a straight face when he opposes marriage equality and selected as his running mate the man [Mike Pence] who signed an anti-LGBT law in Indiana?"
Under Mr Trump's plan, citizens from countries with a history of terror will be banned but it is not clear which nations.
In the speech, he did not lay out his own military strategy for defeating the so-called Islamic State.
But he did repeat his claim he was opposed to the Iraq War before it began, which fact-checkers say is untrue.
And he said that the oil in Iraq should have been seized by the US government to prevent it from becoming the property of IS.
In his speech, Mr Trump promised to:
Ban immigration from countries where terrorism is widespread and vetting is poor
Make alliances with all countries fighting against terrorism
Introduce an ideology test for new immigrants arriving to the US
Keep Guantanamo Bay prison open
Establish a presidential commission to investigate Islamic terror
Work with Nato, despite previously calling it "obsolete"
The billionaire initially proposed a blanket ban on all Muslims but has changed it to one that is based on an unspecified list of countries that export terror.
The latest proposal includes creating an ideological test for immigrants entering the country, with questions addressing how each applicant views American values such as religious freedom, gender equality and gay rights.
"Those who do not believe in our Constitution, or who support bigotry and hatred, will not be admitted for immigration into the country," he said.
Analysis - Aleem Maqbool, BBC News, Washington
It may have been vague on the details of how IS will be defeated militarily, how extremists would be stopped from accessing the internet or how immigrants that share American values would be separated from those who do not, but this speech would have gone down well with his supporters.
But simply by sticking to a script and avoiding the off-the-cuff remarks that have landed him in trouble in the past, Mr Trump may also have wooed some of those Republicans who have been so desperate for him to show a more "presidential" way of doing things.
Some European diplomats in particular have expressed exasperation at the New York businessman's foreign policy statements. But this election is not about them, it's about crowds like the one in Ohio that loudly cheered every line of Trumpist nativism.
Mr Trump said that the test will not only expose terrorist sympathisers, but also will "screen out any who have hostile attitudes towards our country or its principles".
He heavily criticised his rival Hillary Clinton, saying that she lacks the "mental and physical stamina" to defeat IS.
And he attacked her plan to increase the rate of Syrian refugees arrivals, which he claimed would cost $400bn (£315bn).
Mr Trump is still facing a backlash for repeatedly describing Mr Obama and his Democratic rival for the White House, Hillary Clinton, as "founders" of Islamic State.
Vice President Joe Biden speaking at a campaign event with Hillary Clinton said that Mr Trump's claim that Mr Obama and Mrs Clinton had "founded" IS proved his views to be "dangerous" and "un-American", and that it had made US soldiers in Iraq less safe already.
Recent polls show him significantly trailing Hillary Clinton in key battleground states.
It was 45 years ago, on Aug. 15, 1971, when President Richard Nixon announced that the decades-old monetary system that had controlled the U.S. dollar—and thus the world’s currency values—for more than three decades just wasn’t working anymore. To most Americans the news, known as the “Nixon shock,” wasn’t actually shocking. War in Vietnam had drained America’s resources, world currency speculation was rampant and 1970 saw the biggest deficit thus far in U.S. history.
“In the past seven years, there has been an average of one international monetary crisis every year,” Nixon said in his speech outlining his new economic policy. “Now who gains from these crises? Not the workingman; not the investor; not the real producers of wealth. The gainers are the international money speculators. Because they thrive on crises, they help to create them. In recent weeks, the speculators have been waging an all-out war on the American dollar. The strength of a nation’s currency is based on the strength of that nation’s economy—and the American economy is by far the strongest in the world. Accordingly, I have directed the Secretary of the Treasury to take the action necessary to defend the dollar against the speculators.”
Washington cut the dollar’s tie to gold by serving notice that it will no longer cash in foreign-held dollars for gold bullion held at Fort Knox. Ever since 1944, when the present monetary system was devised at Bretton Woods, N.H., the dollar has had a special and internationally unique relationship to gold. Technically, gold is the asset by which nations pay their debts to one another. But practically, under the rules of the 118-nation International Monetary Fund, which evolved from the Bretton Woods conference, dollars are actually the medium of exchange through which nations settle those debts. The system was made possible by a promise from the U.S. Treasury to redeem dollars for gold at $35 an ounce. Because of that promise, IMF member nations had been assured that whenever they wanted gold in exchange for the dollars that they held as payment of debts, all they had to do was ask the Treasury Department in Washington.
U.S. gold reserves have dwindled steadily as a result of the nation’s balance of payments deficits in seven out of the last ten years. When Nixon got a look at the figures for the first six months of this year, he knew that drastic action was necessary. Last week the Department of Commerce released those figures: the U.S. ran a record first-half deficit of $11.6 billion. At that rate, the deficit would be $23 billion by year’s end.
Foreigners held three times as many dollars as the U.S. was capable of redeeming in gold, and they were demanding more and more gold because they were losing confidence in the U.S.’s will or ability to whip its economy into order. To prevent a run on Fort Knox, the President thus declared that the nation would no longer exchange dollars for gold.
That meant that the dollar was no longer as good as gold. Thus foreigners had to sell their dollars in money markets for whatever they could get. Since a surfeit of dollars was sloshing around the world already, they could not expect to get much. In effect the dollar had been devalued.
There was, essentially, no going back, despite Nixon’s “temporarily” caveat. In the decades that followed, the U.S. and world economies would rise and fall and rise and fall, without the help of gold. Even decades later, however, the lure of gold still calls to many so-called goldbugs.
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