The Dollar
''The dollar and the world were pegged to Gold via the post-WWII Bretton Woods agreement in which $35 was convertible to one ounce--but for foreigners only, not U.S. citizens. The rate for international currency exchange was coordinated through the International Monetary Fund (IMF), with each currency pegged to each other through the dollar and Gold. The U.S. economy expanded steadily in the 1950's, producing half of the world's oil, and half of the cars that burned up this oil. By the 1960’s, America was making huge purchases overseas, and the Vietnam War was funded largely through borrowing.
Too many dollars started building up overseas, and as they did so, ever more of them were cashed in for Gold. De Gaulle summed up the sentiment, saying that Americas position as printer of the reserve currency gave it an “exorbitant privilege”, in that other nations had to produce to earn what Uncle Sam could simply print. During the late 60’s it became clear that too many claims had been issued on the US gold, and President Nixon was prompted to close the Gold exchange window in 1971 in the face of a certain run on the Treasury.''
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