In January 1971 he startled the newsman Howard K. Smith by telling him, "I am now a Keynesian in economics," and in August he jolted the nation by announcing a New Economic Policy. This entailed fighting inflation by imposing a ninety-day freeze on wages and prices. Nixon also sought to lower the cost of American exports by ending the convertibility of dollars into gold, thereby allowing the dollar to float in world markets. This action transformed with dramatic suddenness an international monetary system of fixed exchange rates that had been established, with the dollar as the reserve currency, in 1946.
In January 1971, he openly identified as a Keynesian economist, signaling a shift in his economic perspective. Later that year, he introduced a New Economic Policy aimed at controlling inflation through a ninety-day freeze on wages and prices.
The same year, he took a significant step by ending the dollar's convertibility into gold, allowing it to float freely in international markets. This move overturned the fixed exchange rate system established after World War II, which had positioned the dollar as the global reserve currency.
