Bits of News - The dollar and the Prisoner's dilemma

In 1971 America had a currency crisis. Other nations had stopped accepting our paper dollars as payment for our debts and were demanding gold instead. The problem was that America didn't have enough gold to cover the massive debts being run up because of the war in Vietnam.

What did we do? We simply defaulted on our debt by repudiating the promise to back our currency with gold. The situation was epitomized by Nixon's Treasury Secretary John Connally, when he responded to the complaints of 29 trading and banking allies:
"It may be our currency, but it's your problem."