We look at the latest economic theory to claim that governments can spend their way to full employment.

In 1971 the last formal link between paper currencies and gold came to an end when the US decided to end the convertibility, for foreign governments, of the dollar into gold at $35 an ounce. Before then the currencies of IMF member countries had been tied indirectly to gold by having a fixed rate of exchange with the dollar. This change meant that governments no longer had to take into account maintaining the dollar rate of exchange when making economic decisions.