The dollar could bring investors a nasty surprise

Our currency, your problem. That is how John Connally, America’s Treasury secretary, described the dollar to European leaders in 1971. The phrasing was apt. His boss, Richard Nixon, had suspended the convertibility of the dollar into gold and demanded a change to the exchange-rate system established at Bretton Woods in 1944. Other countries were told to strengthen their currencies, or America would subject them to trade restrictions. Compliance followed in short order. By the end of the year, the Smithsonian Agreement had devalued the dollar by around a tenth against key foreign currencies.