It was on this day, exactly 35 years ago, that the monetary system of our world came to birth.

It was an immaculate conception, free of taint from history or tradition, mid-wifed by the administration of Richard Milhous Nixon, which decided that it needed to protect the nation's gold. Thus was renounced the solemn promises made by generations of U.S. Treasury secretaries: U.S. currency obligations would be paid off in gold. Thus ended the time-hallowed monetary tradition of gold backing. Instead, in effect, Nixon plumped for default.

But who cared? By then, the United States was calling the shots around the world - if it chose to debase its own currency, who could do anything about it?

Three and a half decades later, we raise our heads and look around in fear and trembling. What hath this goldless innovation wrought?

In the 1970s, it wrought the worst recession in 40 years, until big Paul Volcker finally got control of inflation. The stage was then set for a big boom - one that took the Dow from under 1,000 to over 11,000. But, since never are there any free lunches in the financial world, stocks did not merely become 11 times more valuable; with the dollar no longer nagged by gold, there was also a tidal wave of money and credit that muddied the whole picture. Yes, stocks were priced 11 times higher, but what were they really worth? No one really knew, because the money in which they were quoted floated at high tide along with the stocks themselves.

The boom only ended in January 2000. What would have happened next, had things been allowed to progress normally, we shall never know. Instead, after jet planes flew into the World Trade Center, the feds panicked and pumped even more credit into the financial system, creating a fresh series of global booms and bubbles...in residential real estate...in foreign markets...in gold and commodities...in derivatives.

Now, it appears that bubble-time has finally come to an end. Loan applications are down 20% from last year. The housing market index is at its lowest level in 15 years. And the National Association of Realtors thinks sales of existing houses will be about 6.5% lower this year than the last.

"Who's going to buy all those condos?" asks the Minneapolis paper.

Who indeed. Markets go down...and go up. But what has the goldless market really accomplished? Are people better off? Richer, freer, happier?

They are no happier, say the polls. The welter of laws, codes, and regulations tying down the nation tell us they are no freer. But are they richer? Yes...and no. The rich have gotten richer, because their assets have shot up in price. But those who are not rich? The numbers are squishy, slippery; comparisons are elusive. But in terms of disposable money, the working man has made almost no financial progress in the last 35 years.

"It bothers me," former Federal Reserve Chairman Paul Volcker said in an interview. "I tell you, I don't know why there hasn't been more discussion and more unhappiness about this because it's become quite distinct. For a long time now, if we believe the statistics, the average working guy does not have an increase in income."

The International Herald Tribune elucidates further:

"Previously, income grew more or less in step with household wealth. From 1962 to 1966, a period of low inflation and robust economic growth, real private sector wages rose 27.5 percent while real net worth increased 23.6 percent, according to Bloomberg News calculations based on government data. In the five-year period ending in 1996, real net worth gained 15.6 percent while private wages grew 11.3 percent.

"More recently, the gap between household net worth and wage growth has widened. From 2001 to 2005, the value of household assets minus liabilities rose 16.6 percent after inflation. Private sector wages rose just 2.7 percent."

We look around and ask ourselves what the average man has got from the new and improved monetary regime of the last 35 years. A bigger mortgage. A longer workday. More gadgets, automobiles and houses. A government far deeper in debt than any government ever was.

He has gotten more globalized commerce, too. Easy credit has bought him gadgets from Hangzhou, China, or Bangalore, India, as easily as from San Diego, California, or Gary, Indiana. He's also discovered two billion people who want his job, his house, and his standard of living.

Too bad they can't afford them. Too bad he can't, either.

Bill Bonner is the President of Agora Publishing.  For more on Bill Bonner, visit The Daily Reckoning.