WTF Happened in 1971? (2019)
A viral site filled with economic charts asking “WTF Happened in 1971?” has renewed debate over what actually changed in the early 1970s and why so many measures of U.S. prosperity began to diverge. Some point to the end of the Bretton Woods system and the move off the gold standard as the pivotal break that enabled inflation, financialization and asset booms, while others argue the graphs are cherry‑picked and that broader forces—oil shocks, the rise of neoliberal policy, deindustrialization, zoning and housing constraints, weakening unions, and shifting executive pay norms—better explain wage stagnation and rising inequality. Several contributors also highlight how this framing is often used to promote “sound money” ideas like gold or Bitcoin, cautioning against monocausal stories for complex, decades‑long trends.
Gold standard, Bretton Woods, and the Nixon Shock
- Many commenters link the site’s inflection to the 1971 break with Bretton Woods and the end of dollar–gold convertibility.
- Some argue returning to a gold standard is mechanically simple (fix a rate, redeem dollars for gold) but broadly considered a bad idea by economists and would have drained US gold under trade deficits.
- Others stress the US was already effectively off a “pure” gold standard long before 1971 and had been over‑issuing dollars relative to gold.
Alternative explanations for the 1970s break
- Suggested drivers: 1973 oil crisis, rising energy prices/EROI limits, end of cheap oil, Nixon’s price/wage controls, opening to China, Vietnam War, civil rights and cultural shifts, women entering the workforce, zoning/urban policy, and the broader “neoliberal turn” (Reagan/Thatcher, monetarism, Volcker shock).
- Some narrow it to particular political documents or lobbying/legislative changes in 1970–71 that empowered corporate influence.
Critiques of the WTFHappenedin1971 site
- Many see heavy cherry‑picking and arrows placed on graphs where the visible break is often mid‑70s or around 1980 instead of 1971.
- Multiple links are shared to detailed rebuttals and “spurious correlations” resources; concern that the site nudges readers toward a gold/Bitcoin “sound money” narrative without saying it outright.
- Others say the charts still capture a real multi‑indicator shift in the 70s, even if the monocausal 1971 framing is overstated.
Wages, inequality, and executive pay
- Widening gap between productivity and typical wages is widely acknowledged, though timing and magnitude are debated.
- Proposed causes include collapse of unions, offshoring, political choices on taxes and labor, healthcare costs, and especially the explosion in executive compensation and financialization.
- Some argue CEO pay can’t numerically explain the whole wage–productivity gap but may realign incentives toward capital and away from labor.
Fiat money, credit, and central banking
- One camp blames fiat currency and credit expansion for asset booms, inequality, and “fake” growth; sees Bitcoin/gold as remedies.
- Others counter that crises, inflation, and credit cycles long predate 1971 and gold standards; argue problems lie in credit and political economy, not just fiat.
- Debate over whether central banks should have strong independence versus tighter democratic control.
Meta‑points
- Several note that large systemic shifts rarely have a single cause or year; they see 1960s–80s as a transition era, with 1971 one milestone among many.