The Collapse of the Bretton Wood System

Apr 1st, 2015
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The Collapse of the Bretton Wood SystemName:University:Teacher:IntroductionAmong the major economic events recorded in all history, the collapse of Bretton Woods's system which operated in fixing exchange rates fell among the most projected collapsing events in the economic industry. Consequentially, the peak season under which Bretton woods operated as anticipated under total convertibility only lasted from the year 1959 to 1968 (Blinder, A. S. 1996). Most of these occurrences owed to the dollar. The value of the US dollar by the early 1960s under the Bretton Wood system had escalated and the fixed exchange rates were perceived as overvalued. This then affected domestic budgets on President Lyndon Johnson's prodigious society programs. The overvalued dollar also caused an immense rise in the spending which was brought about by the Vietnam War, and this worsened the situation further (Eichengreen, B. (2009).Hence between 1968 and 1973, Bretton Woods's system of fixed exchange rates' future seemed to dimmer off. The temporary suspension of the dollar's conversion into gold by Bretton was announced on the August of 1971 by the U.S president Richard Nixon, and this marked the beginning of the collapse of the system. Although an attempt to save and revive the system was made, it was unanimously rejected and as at March of 1973 numerous major world currencies commenced floating against each other (Eichengreen, B. (2009).The IMF members; since the fall of Bretton W

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