User talk:Eohatdan37

I would like to understand more about Bretton Woods and Nixon Shock.

Here is what I understand to date. I would welcome corrections, additions or any other thoughtful, non-flaming comments.

Bretton Woods:

At the close of WW II, the U.S. was the preemminent world power, with weapons, troops and technology that far surpassed the rest of the world. We used this power as leverage to get the rest of the major countries to agree that the dollar would be the basis of exchange for the world. We also established the International Monetary Fund and the World Bank, both of which served to reinforce the superiority of the U.S. financially.

In return, the U.S. pledged to use gold as the basis of the dollar and to deliver upon demand gold at a fixed exchange rate for dollars.

Nixon Shock:

In 1971, acting on his own, without advice, consent or any other of the normal checks and balances, Richard Nixon reneged on the pledge made at Bretton Woods and by 1976 the dollar, along with the rest of the world currency was left to float freely.

The result of Nixon Shock is the enormous trade deficit and national debt that we are now experiencing. We can spend billions on whatever the crisis de jour happens to be and just print more money to cover it.

Questions:

How was Nixon allowed to get away with this?

What would it take to remedy this violation of trust?

Why isn't the rest of the world screaming foul?