Economic crisis in the post-Bretton Woods age

Here are some brief thoughts on the monetary system’s role in repeated economic crisis in the last 40 years.

I am back from my winter break in sunny Mexico. And I have my thought process nearly done for the Ten Surprises of 2014 post. I know it’s a bit far into 2014 to post this but the data at the beginning of the year were so uncertain, it was hard to make any good calls. Now almost two months in, the year is taking better form. Emerging markets, China, the US and Europe all seem a bit more understandable.

And that leads me to today’s topic: crisis in the post-Bretton Woods age. During the post-World War II period, there were no major crises despite the fact that we had a nuclear standoff between the Soviet Union and the United States and despite the disintegration of the British Empire and western colonialism. A lot of things happened in the years after World War 2 like the India-Pakistan split, the Korean War, Suez, the Cuban Missile Crisis, The Gulf of Tonkin incident and the subsequent Vietnam War are just a few. As a former diplomat and political historian, I can tell you that this was an exciting period, even from a revolutionary perspective: China, Algeria, Vietnam, Cuba, US Civil rights, Hungary, Czechoslovakia and the list goes on.  So, it’s not like we saw neither political upheaval nor massive change. We saw this in spades. What we didn’t see was a major global economic crisis.

Since the end of Bretton Woods, it seems we have a crisis every four or five years. The first crisis was the one which ended the Bretton Woods system after a relatively mild economic slump in the US from 1960-1970. The key here is that the economic decline had already set in and the post-War bull market peaked in 1966. By 1971, the US was running out of gold. There was only $10 billion of gold in its coffers, half the 1960 level. So the US gold peg had to end. And with it, ended the stability of the Bretton Woods system.


Artykuły powiązane

System z Bretton Woods i jego dziedzictwo – wnioski z konferencji naukowej

Kategoria: Analizy
Po upadku systemu z Bretton Woods zwiększyła się skala dyskrecjonalności polityki pieniężnej. Rosnąca popularność kryptowalut wymusiła na bankach centralnych zainteresowanie pieniądzem cyfrowym, który ponownie może zmienić zasady rządzące polityką pieniężną.
System z Bretton Woods i jego dziedzictwo – wnioski z konferencji naukowej

Tydzień w gospodarce

Kategoria: Raporty
Przegląd wydarzeń gospodarczych ubiegłego tygodnia (04–08.04.2022) – źródło: dignitynews.eu
Tydzień w gospodarce

Tydzień w gospodarce

Kategoria: Trendy gospodarcze
Przegląd wydarzeń gospodarczych ubiegłego tygodnia (30.05–03.06.2022) – źródło: dignitynews.eu
Tydzień w gospodarce