In May 1971, West Germany left the Bretton Woods system. Switzerland bought $50 million for gold. In early August 1971, France sent a battleship into New York Harbor and accepted $191 million in gold (Huffington Post). On August 11, the British ambassador asked to buy back $ 3 billion for gold (1/3 of the American gold reserve, Tyler Durden). President Nixon (copy) announced on August 15, 1971: Dissatisfaction with the political implications of the dollar system was intensified by détente between the United States and the Soviet Union. The Soviet military threat had been a major force in cementing the US-led monetary system. The political and security umbrella of the United States helped make American economic dominance acceptable to Europe and Japan, which had been economically exhausted by the war. As gross domestic production increased in European countries, trade increased. As common security tensions eased, this eased transatlantic dependence on defence concerns and led to latent economic tensions. The Bretton Woods rules, set out in the Articles of Agreement of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), provide for a system of fixed exchange rates. The rules also aimed to promote an open system by requiring members to convert their respective currencies into other currencies and to trade freely. The United States launched the European Economic Recovery Plan (Marshall Plan) to provide substantial financial and economic assistance for the reconstruction of Europe, mainly through grants, not loans.

Countries belonging to the Soviet bloc, e.B. Poles were invited to receive the subsidies, but received a favorable agreement with the Comecon of the Soviet Union. [31] In a speech at Harvard University on June 5, 1947, U.S. Secretary of State George Marshall declared: A devastated Britain had little choice. Two world wars had destroyed the country`s main industries, which paid for the import of half of the country`s food and almost all its raw materials except coal. The British had no choice but to ask for help. It was not until the United States signed an agreement on December 6, 1945, to provide Britain with $4.4 billion in aid, that the British Parliament ratified the Bretton Woods Agreements (which happened later in December 1945). [24] What emerged largely reflected U.S. preferences: a subscription and quota system integrated into the IMF, which itself was to be nothing more than a fixed pool of national currencies and gold subscribed by each country, as opposed to a world central bank capable of creating money. The fund has been tasked with managing the trade deficits of various countries so that they do not cause currency devaluations that would trigger a decline in imports. A key force that led to the collapse of Bretton Woods was the rise in inflation in the United States, which began in 1965.

Until this year, Federal Reserve Chairman William McChesney Martin had kept inflation low. The Fed also attached great importance to the balance of payments deficit and the gold stock of the US money supply in its deliberations (Bordo and Eichengreen 2013). Beginning in 1965, the Martin Fed shifted to an inflationary policy that lasted until the early 1980s and became known as Great Inflation in the 1970s (see Chart 3). One of the reasons Bretton Woods worked was that the United States was clearly the most powerful country at the table and was finally able to impose its will on others, including an often dismayed Britain. At the time, a senior Bank of England official described the Bretton Woods agreement as “the biggest blow to Britain outside of the war,” in large part because it highlighted how financial power had shifted from Britain to the United States. [23] All attempts to maintain the bond collapsed in November 1968, and a new political program attempted to transform the Bretton Woods system into an enforcement mechanism established either by fiduciary policy or by a restriction on the honor of foreign accounts. .