Transfer of global economic power to the USA

“The conference where global economic power passed from Britain (and France) to the USA was Versailles, after WWI not during WWII. Keynes thought the Versailles terms a disaster for Germany, and he was right. Bretton Woods was intended to prevent a recurrence after WWII of the Beggar-my-neighbour exchange-rate & trade policies after WWI, leading to a system of fixed-but-adjustable exchange-rates where the US $ would be the anchor and reserve-currency, and the US guaranteed a price of $35 a troy oz of gold for foreign govts holding dollars (a “dollar exchange” standard as opposed to a pure gold standard or a gold exchange standard); all economies other than the US had collapsed as world exporters  after WWII (the US had at one point after WWII some 40% of world exports). The Bretton Woods system itself collapsed finally on Aug 15 1971 when Pres Nixon “closed the gold window” (another story, caused in part by the US financing the Vietnam war in an inflationary manner, so other govts ended up holding excessive US$ and there was a threat they might use the US guarantee).”

Professor Subroto Roy April 9, 2011

I completely agree with this analysis.

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