DOCSLIB.ORG

Copyrighted Material

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Copyrighted Material Index • A • banks. See also central banks Bank of England, 209 absolute PPP European Central Bank, 19, 234, Big Mac standard and, 161–164 260–262, 277 fi guring, 157 European System of Central Banks, accountability, ECB, 262 260, 270 Africa Federal Reserve Bank (the Fed), 218, international franchises in, 41 233–234 South African gold reserves, 249 International Bank for Reconstruction American-type options, 180 and Development, 215–216, 221 Andorra, 263 national central banks, 260 appreciation (revaluation) Swiss National Bank, 229–231 defi ned, 13 barter economy euro, 264 demand–supply framework, 71–75 exchange rate, 28–32 exchange rates, 22 Argentina, 235 beggar-thy-neighbor policies, 210 asset approach to exchange rate Belgium determination, 89, 99–102. See also in European monetary system, 258 MBOP in European Union, 263 asset markets, 282, 292 London Gold Pool, 222 Atlantic Charter, 214 monetary agreement, 206 Australia role in establishment of EEC, 256 dollar–dollar rate exchange, 114 bid–ask spread, exchange rate, 35–37 gold reserves, 249 Big Mac standard gold standard, 209 overview, 161–162 money market, 129–131 unrealistic expectations, 280 Austria, 205–206, 263 using to evaluate currencies, 162 autonomous monetary policy, 251 bimetallic era monetary system COPYRIGHTEDoverview, MATERIAL 204 • B • U.S. and, 204–205 world, 205–206 balance of payments (BOP), 88, 199–200. bonds, downgrading, 269 See also MBOP BOP (balance of payments), 88, 199–200. Bancor, 215 See also MBOP Bank of England, 209 226_9781118523896-bindex.indd6_9781118523896-bindex.indd 293293 33/26/13/26/13 33:01:01 PMPM 294 International Finance For Dummies Bretton Woods Conference (United overview, 181–182 Nations Monetary and Financial selling, 183–184 Conference in Bretton Woods) Canada American plan, 215–216 gold standard, 209 avoiding past mistakes, 213 Medicago, 40–41 British plan, 215 Onex Corporation, 42 ideological views, 214 capital account convertibility, 219 International Monetary Fund, capital fl ow restrictions 17, 219–220 fl oating exchange rates and, 228–229 overview, 212–213 IMF allowance of, 220 setting reserve currency system, reasons for, 82 217–218 capitalism, factor in Bretton Woods Bretton Woods system. See also Bretton Conference, 214 Woods Conference carry trade, 153 collapse of, 223–225 central banks defi ned, 196 Bank of England, 209 deterioration of, 221–223 control of nominal money supply, 93–94 dollar shortage and Marshall Plan, currency board and, 234–235 220–221 direct interventions, 230–232 established at Bretton Woods dollarization, 234 conference, 217–218 European Central Bank, 19, 234, gold parity in, 247 260–262, 277 London Gold Pool, 222 European System of Central Banks, overview, 211–212 260, 270 Special Drawing Rights, 223 Federal Reserve Bank (the Fed), Britain 218, 233–234 bimetallic standard, 205 fl oating exchange rates and, 228 in European Union, 263 foreign exchange markets, 43 gold standard, 207–209 interventions, 275, 280, 282 London Gold Pool, 222 national central banks, 260 loss of superpower status, 220 Swiss National Bank, 229–231 proposal at Bretton Woods ceteris paribus conditions Conference, 215 applying real shocks to MBOP, 115–116 suspension of gold parity, 195 money demand curve, 92 Bulgaria, 263 money supply, 93–96 Business Day, 41 supply-demand framework, 73, 77–78 Businessweek, 42 chartist traders, 289 Chicago Mercantile Exchange (CME), 175 • C • China currency undervaluation, 237–238 California Gold Rush of 1849, 205 joint venture with Kellog, 41 call options soft pegs (crawling pegs), 238 defi ned, 179 Churchill, Winston, 256 exercising, 182–183 226_9781118523896-bindex.indd6_9781118523896-bindex.indd 294294 33/26/13/26/13 33:01:01 PMPM Index 295 Civil War, U.S., 204–205 convergence criteria, Maastricht Treaty classical–neoclassical school of of 1992, 259–260, 263, 277 economics (long-run analysis of convertibility in currencies (current economics) account convertibility), 219 defi ned, 94 convertible paper money, 194–195 nominal shocks, 120 covered interest arbitrage, 145–150 CME (Chicago Mercantile Exchange), 175 CPI (consumer price index), 24, 58–60 Cold War, 221, 222, 277 crawling pegs (soft pegs) combined MBOP attracting foreign investors with, changes in exchange rate equilibrium 238–241 in, 112–113 defi ned, 232 exchange rate, 113–114 general discussion, 235–238 explicit money market, 113 credit risk, FX derivatives, 177 overview, 111–112 Crimean War, 206 commodity markets, 281, 292 cross rates commodity standard system, 196 under Bretton Woods system, 217–218 common currency (euro) exchange rate, 34–35 accomplishments of Euro-zone, 265–266 Cuba, 263 challenges of Euro-zone, 266–267 Cuban Missile Crisis in 1962, 222, 277 Economic and Monetary Union, 259–260 currency. See also domestic currency European Central Bank, 260 buying and selling in spot (derivative) European Monetary System, 258–259 markets, 46–47 European System of Central Banks, 260 currency crises, 239–246 Euro-zone member states, 263–264 euro versus other currencies, 264–265 history of European Union, 256 exchange rate as price of, 22 national central banks, 260 foreign, 32–33, 35–37 optimum currency area, 256–257 seignorage, 234 versus other currencies, 264–265 speculative attack, 241 overview, 255 using Big Mac standard to evaluate, sovereign debt crisis, 268–270 162–164 value of policy coordination in, 277 variables that affect depreciation concerted intervention, 275 (devaluation), 273 conditionality, IMF, 244–245 currency board, 197, 234–235 consumer price index (CPI), 24, 58–60 currency crises consumption basket anatomy and timeline, 239–241 calculating real exchange rate, 24 IMF and, 241–246 defi ned, 12 current account, BOP, 200 consumption correlation puzzle, 288 current account convertibility contractionary monetary policy (convertibility in currencies), 219 Australian, effects of, 130–131 Cyprus, 259, 263 defi ned, 129 Czech Republic, 263 226_9781118523896-bindex.indd6_9781118523896-bindex.indd 295295 33/26/13/26/13 33:01:01 PMPM 296 International Finance For Dummies • D • foreign exchange, marking-to-market process, 177–179 debasement, 193–194 foreign exchange, options, defi cits 168, 170, 179–187 current account, U.S., 221–222 foreign exchange, speculators, 170 monetizing the defi cit, 240 foreign exchange, volatility, 276, 279 trade, American plan for managing, determining exchange rate. See also 215–216 MBOP trade, British plan for managing, 215 asset approach, 99–102 defl ationary vortex, 210 microeconomic approach, 14 demand–supply framework overshooting, 281 barter economy, 71–75 prediction rules, 14–15 comparing demand-supply model and short-run rigidities (sticky prices), MBOP approaches to exchange rate 95–96, 281 determination, 131–133 through demand–supply framework, exchange rate determination, 14–15, 76–78 14–15, 76–78, 282 devaluation (depreciation) government interventions, 82–83 defi ned, 13 growth rate, 80 euro, 264 infl ation rate, 78–79 exchange rate, 28–32 interest rate, 81–82 variables that affect, 273 versus MBOP, 89 direct interventions using alternative exchange rate, 83–85 infl uence on exchange rates, 280 Denmark, 206, 258, 263 overview, 229 depreciation (devaluation) sterilized, 230, 282 defi ned, 13 unsterilized, 230 euro, 264 dirty fl oat, 66, 229 exchange rate, 28–32 dollar variables that affect, 273 dollar shortage and Marshall Plan, derivative (spot) markets 220–221 buying and selling currency in, 46–47 questioning privileged role of, 224 call options, 182–184 as reserve currency system, 217–218 covered versus uncovered interest Smithsonian Agreement, 225 arbitrage, 146–147 dollar exchange standard (Bretton forward contracts, 171–175 Woods system). See also Bretton put options, 184–186 Woods Conference derivatives collapse of, 223–225 defi ned, 167 defi ned, 196 foreign exchange, arbitrage, 176–177 deterioration of, 221–223 foreign exchange, forward contracts, dollar shortage and Marshall Plan, 140–141, 168–170, 171–175 220–221 foreign exchange, future contracts, established at Bretton Woods 168, 170, 175–179 Conference, 217–218 226_9781118523896-bindex.indd6_9781118523896-bindex.indd 296296 33/26/13/26/13 33:01:01 PMPM Index 297 gold parity in, 247 monetary policy coordination, 19 London Gold Pool, 222 objectives, 260–261 overview, 211–212 transparency, 262 Special Drawing Rights, 223 ECON (European Parliament’s dollar market Committee on Economic and ceteris paribus conditions, 77–78 Monetary Affairs), 262 price, 76–77 Economic and Monetary Union (EMU), quantity, 76–77 259–260 dollar–euro exchange rate, 28–29, 83–85 economic development, import- dollarization, 197, 233–234 substitution strategy, 82 domestic currency Economist appreciation of, 104 Big Mac standard, 161–164 currency board, 197, 234 Swiss franc’s appreciation against euro, direct interventions, 229–230 229–232 dollarization, 197, 233 ECSC (European Coal and Steel effective exchange rate, 25 Community), 256 exchange rate as price of, 33–34 ECU (European Currency Unit), 256 fl oating, 241 Ecuador, 234 government interventions and, 82 EEC (European Economic Community), infl ation and, 159 224, 256, 257 multinational fi rms and, 13 effective exchange rate, 12, 25–26 pegged exchange rate regime, 17 effi cient markets hypothesis, 292 pegging to hard currency, 239 EFSF (European Financial Stability soft pegs, 235–236 Facility) domestic fi rms creating, 268 acquisition of foreign fi rms, 42 utilizing, 268–269 franchising, 41 empirical verifi cation, of IRP, 152 joint ventures with foreign fi rms, 41 employment factor,
Load more

Recommended publications
  • A Comprehensive Guide to the Gold Price
    A Comprehensive Guide to the Gold Price A Comprehensive Guide to the Gold Price Table of Contents ______________________ Introduction ..................................................................................................................... 2 The Global Gold Market ............................................................................................... 3 The Over-the-Counter Spot Market ............................................................................ 4 The London Gold Fix ................................................................................................... 5 Futures Market Gold Prices.......................................................................................... 7 Where is the Gold Price Established? ....................................................................... 8 Gold Price Ratios ......................................................................................................... 10 Determinants of the Gold Price ................................................................................. 14 The Components of Demand and Supply ................................................................ 14 The Factors Behind Demand and Supply ................................................................. 15 The Gold Price and Inflation ..................................................................................... 16 The History of the US Dollar Gold Price ............................................................... 18 The 1934 Repricing to $35 Per Ounce .....................................................................
    [Show full text]
  • The Gold Pool (1961-1968) and the Fall of the Bretton Woods System
    NBER WORKING PAPER SERIES THE GOLD POOL (1961-1968) AND THE FALL OF THE BRETTON WOODS SYSTEM. LESSONS FOR CENTRAL BANK COOPERATION. Michael Bordo Eric Monnet Alain Naef Working Paper 24016 http://www.nber.org/papers/w24016 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 November 2017 The views expressed in this paper do not represent the opinion of the Banque de France, Eurosystem, or the National Bureau of Economic Research. We thank the archivists of the Bank for International Settlements, the Bank of England, the New York Fed and the Banque de France for their help. Piet Clement kindly shared by email some additional documents. Kathleen Rasmussen guided us to the US Department of State online archives. We are grateful to seminar participants at the University Paris 1 Sorbonne, the credit, currency and commerce conference (University of Cambridge), Saint Louis Fed and World Cliometrics Congress for comments. We are indebted to Owen Humpage, Walter Jansson and Catherine Schenk for comments on previous drafts. We also thank David Chambers for sharing data. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications. © 2017 by Michael Bordo, Eric Monnet, and Alain Naef. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. The Gold Pool (1961-1968) and the Fall of the Bretton Woods System. Lessons for Central Bank Cooperation.
    [Show full text]
  • State Attempts to Tax Sales of Gold Coin and Bullion in the United States: the Onsc Titutional Implications Neal S
    Boston College International and Comparative Law Review Volume 5 | Issue 2 Article 2 8-1-1982 State Attempts to Tax Sales of Gold Coin and Bullion in the United States: The onsC titutional Implications Neal S. Solomon Linda D. Headley Follow this and additional works at: http://lawdigitalcommons.bc.edu/iclr Part of the Constitutional Law Commons, and the Tax Law Commons Recommended Citation Neal S. Solomon & Linda D. Headley, State Attempts to Tax Sales of Gold Coin and Bullion in the United States: The Constitutional Implications, 5 B.C. Int'l & Comp. L. Rev. 297 (1982), http://lawdigitalcommons.bc.edu/iclr/vol5/iss2/2 This Article is brought to you for free and open access by the Law Journals at Digital Commons @ Boston College Law School. It has been accepted for inclusion in Boston College International and Comparative Law Review by an authorized editor of Digital Commons @ Boston College Law School. For more information, please contact [email protected]. STATE ATTEMPTS TO TAX SALES OF GOLD COIN AND BULLION IN THE UNITED STATES: THE CONSTITUTIONAL IMPLICATIONS by Neal S. Solomon* and Linda D. Headley** I. INTRODUCTION When the U.S. Congress, in 1974, legalized private ownership of gold coin and bullion I after forty years of prohibition, Congress did not state whether it intended to permit the states to tax gold coin2 and bullion3 sales and purchases.4 Although at least one state has declined this new opportunity for tax revenue,5 Copyright 1982 by Neal S. Solomon and Linda D. Headley. • B.A., Yale University (1972); J.D., Stanford University (1975) .
    [Show full text]
  • CPM Market Commentary 2018-1, 50 Years of Free Gold Prices, 2018-03
    Market Commentary No. 1 26 March 2018 50 Years Of Free Gold It is difficult to say when the ‘free’ gold market came into existence, since there always has been one. Yes, the gold price has been set and fixed by governments for long periods of time throughout history, as part of various types of gold standards. However, gold prices always have fluctuated around those official prices. Setting such nuances aside, the modern gold market 50 years ago this month when the free or private gold price spun out of the control of central banks and governments. A more accurate description is that the fixed dollar-gold exchange rate that existed in the period from World War Two became too expensive and economically destructive for governments to maintain, so they let it go. The process of letting go started in March and April 1968. The change came in two big moves in March and April 1968: The closing of the London Gold Pool and the closing of the U.S. Treasury’s private gold window, through which non-governmental people and entities traded dollars for gold held by the Treasury. Central banks closed the London Gold Pool and stated they no longer would trade gold and currencies in the open mar- ket in an attempt to keep the market price of gold in line with the official $35 per ounce price at which central banks traded gold among themselves. Efforts to keep the two prices aligned had cost central banks hundreds of millions of ounces of gold and billions of dollars from the late 1940s through 1968.
    [Show full text]
  • US Foreign-Exchange Operations and Monetary Policy in the Twentieth Century
    This PDF is a selection from a published volume from the National Bureau of Economic Research Volume Title: Strained Relations: U.S. Foreign-Exchange Operations and Monetary Policy in the Twentieth Century Volume Author/Editor: Michael D. Bordo, Owen F. Humpage, and Anna J. Schwartz Volume Publisher: University of Chicago Press Volume ISBN: 0-226-05148-X, 978-0-226-05148-2 (cloth); 978-0-226-05151-2 (eISBN) Volume URL: http://www.nber.org/books/bord12-1 Conference Date: n/a Publication Date: February 2015 Chapter Title: U.S. Intervention during the Bretton Woods Era, 1962– 1973 Chapter Author(s): Michael D. Bordo, Owen F. Humpage, Anna J. Schwartz Chapter URL: http://www.nber.org/chapters/c13540 Chapter pages in book: (p. 120 – 209) 4 US Intervention during the Bretton Woods Era, 1962– 1973 There is little evidence . of any systematic eVort by the Federal Reserve to conduct monetary policy in a manner consistent with the requirements of a Wxed exchange rate sys- tem. And, there is no evidence that any of the administrations objected to this neglect. —Allan H. Meltzer (1991, 55) 4.1 Introduction The Bretton Woods Wxed- exchange- rate system attempted to maintain par values and promoted free cross- border Wnancial Xows while still allow- ing countries to promote domestic macroeconomic objectives, notably full employment. It hoped to do so by allowing countries to alter parities in the face of fundamental disequilibria and to temporarily impose restraints on Wnancial Xows. Whether such a system ever oVered a long- term, viable solu- tion to the fundamental trilemma of international Wnance seems unlikely, but more immediate Xaws shortened whatever longevity Bretton Woods may have had.
    [Show full text]
  • Declaration of Chris Powell
    Case 1:09-cv-02436-ESH Document 13-1 Filed 09/27/10 Page 1 of 15 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA GOLD ANTI-TRUST ACTION ) COMMITTEE, INC., ) ) Plaintiff, ) ) v. ) Civil Action No. 09-02436 (ESH) ) BOARD OF GOVERNORS ) OF THE FEDERAL RESERVE SYSTEM, ) ) Defendant. ) DECLARATION OF CHRIS POWELL 1. My name is Chris Powell. I am managing editor of the Journal Inquirer newspaper in Manchester, Connecticut. http://www.journalinquirer.com/. I also serve as secretary- treasurer and co-founder of Gold Anti-Trust Action Committee Inc., also known as GATA, the plaintiff in this action. http://www.gata.org/. Additionally, I serve on the board of directors of the Connecticut Council on Freedom of Information. 2. As a journalist and as a student of the history of gold and central banking for many years, I have researched the ways governments have sought to suppress the price of gold. It is my belief that the U.S. Government — through the U.S. Department of the Treasury (and its Exchange Stabilization Fund1) and the Federal Reserve System — continue to intervene in supposedly free markets to suppress the price of gold through various mechanisms, prominent among which are “gold swaps.” Gold swaps are exchanges of gold between central banks 1 http://www.ustreas.gov/offices/international-affairs/esf/ (“The legal basis of the ESF is the Gold Reserve Act of 1934 [which provides] ‘the Secretary …, with the approval of the President, may deal in gold, foreign exchange, and other instruments of credit and securities.’”) Case 1:09-cv-02436-ESH Document 13-1 Filed 09/27/10 Page 2 of 15 2 allowing one central bank to intervene in the gold market on behalf of another central bank, generally to give anonymity to the central bank that wants to undertake the intervention.
    [Show full text]
  • The Bretton Woods Prescription: Monetary Price Rules for Today
    The Bretton Woods Prescription= Monetary Price Rules for Today - R David Ranson, H C Wainwright & Co., Economics Inc. r The Bretton Woods monetary system, which was the final phase in the decline and fall of the gold standard, pegged all convertible currencies to the U.S. dollar, r and the dollar to gold at $35 an ounce. In theory, these price rules guaranteed that every participating currency was "good as gold", while in practice, markets guessed (usually correctly) that many countries would adjust their pegs, with the result that some currencies were more nearly "as good as gold" than others. By 1974 the Bretton Woods system was repudiated in favor of a non-system in which all currencies floated with respect to one another, and all floated with r respect to gold. Since that time inflation has become the norm, interest rate spreads are wide and variable, and financial markets have become highly volatile - all indications are that the Great Float has failed, and that it is time for another change in regime. Historical patterns show adverse effects from three major sources of monetary instability: in currency values, in precious metal prices, and in interest rates. Past experience suggests, therefore, a threefold price rule for modern times, going far beyond the Bretton Woods agreement. Currency boards could establish immutably fixed exchange rates between participating currencies and the dollar. The dollar itself could be pegged to a commodities basket (including gold). Finally, dollar interest rates could be held to levels as low and as stable as during I World War II.
    [Show full text]
  • The Golden Dilemma
    NBER WORKING PAPER SERIES THE GOLDEN DILEMMA Claude B. Erb Campbell R. Harvey Working Paper 18706 http://www.nber.org/papers/w18706 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 January 2013 We appreciate the comments of Arjun Divecha, Steve Hanke, Jens Herdack, Raymond Kerzérho, Sandy Leeds, Anthony Morris, Tapio Pekkala, seminar participants at the Russell Academic Advisory Board, participants at the CFA seminars in Atlanta and Montreal as well as participants at the Man Summit meetings in Frankfurt, Vienna, Nurnberg and Munich. At least one co-author has disclosed a financial relationship of potential relevance for this research. Further information is available online at http://www.nber.org/papers/w18706.ack NBER working papers are circulated for discussion and comment purposes. They have not been peer- reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications. © 2013 by Claude B. Erb and Campbell R. Harvey. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. The Golden Dilemma Claude B. Erb and Campbell R. Harvey NBER Working Paper No. 18706 January 2013 JEL No. E58,G10,G11,G15,G28,N20 ABSTRACT While gold objects have existed for thousands of years, gold’s role in diversified portfolios is not well understood. We critically examine popular stories such as ‘gold is an inflation hedge’. We show that gold may be an effective hedge if the investment horizon is measured in centuries.
    [Show full text]
  • US Intervention During the Bretton Wood Era: 1962–1973
    working 11 08 paper U.S. Intervention during the Bretton Wood Era: 1962–1973 Michael D. Bordo, Owen F. Humpage, and Anna J. Schwartz FEDERAL RESERVE BANK OF CLEVELAND Working papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded offi cial Federal Reserve Bank of Cleveland publications. The views stated herein are those of the authors and are not necessarily those of the Federal Reserve Bank of Cleveland or of the Board of Governors of the Federal Reserve System. Working papers are available at: www.clevelandfed.org/research. Working Paper 11-08 April 2011 U.S. Intervention during the Bretton Wood Era: 1962–1973 by Michael D. Bordo, Owen F. Humpage, and Anna J. Schwartz By the early 1960s, outstanding U.S. dollar liabilities began to exceed the U.S. gold stock, suggesting that the United States could not completely maintain its pledge to convert dollars into gold at the offi cial price. This raised uncertainty about the Bretton Woods parity grid, and speculation seemed to grow. In re- sponse, the Federal Reserve instituted a series of swap lines to provide central banks with cover for unwanted, but temporary accumulations of dollars and to provide foreign central banks with dollar funds to fi nance their own interven- tions. The Treasury also began intervening in the market. The operations often forestalled gold losses, but in so doing, delayed the need to solve Bretton Woods’ fundamental underlying problems.
    [Show full text]
  • The International Monetary System in Retrospect
    SUBSCRIBE NOW AND RECEIVE CRISIS AND LEVIATHAN* FREE! “The Independent Review does not accept “The Independent Review is pronouncements of government officials nor the excellent.” conventional wisdom at face value.” —GARY BECKER, Noble Laureate —JOHN R. MACARTHUR, Publisher, Harper’s in Economic Sciences Subscribe to The Independent Review and receive a free book of your choice* such as the 25th Anniversary Edition of Crisis and Leviathan: Critical Episodes in the Growth of American Government, by Founding Editor Robert Higgs. This quarterly journal, guided by co-editors Christopher J. Coyne, and Michael C. Munger, and Robert M. Whaples offers leading-edge insights on today’s most critical issues in economics, healthcare, education, law, history, political science, philosophy, and sociology. Thought-provoking and educational, The Independent Review is blazing the way toward informed debate! Student? Educator? Journalist? Business or civic leader? Engaged citizen? This journal is for YOU! *Order today for more FREE book options Perfect for students or anyone on the go! The Independent Review is available on mobile devices or tablets: iOS devices, Amazon Kindle Fire, or Android through Magzter. INDEPENDENT INSTITUTE, 100 SWAN WAY, OAKLAND, CA 94621 • 800-927-8733 • [email protected] PROMO CODE IRA1703 From Gold to the Ecu The International Monetary System in Retrospect —————— ✦ —————— LELAND B. YEAGER ur present international monetary system evolved from the inter- national gold standard, to which, even nowadays, some reformers O would have us return. It is not a standard hallowed by the ages. Although gold and silver coins appeared in ancient times, widespread stan- dardization of money units as weights of gold goes back only to the nine- teenth century.
    [Show full text]
  • The Collapse of the Bretton Woods Fixed Exchange Rate System
    This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: A Retrospective on the Bretton Woods System: Lessons for International Monetary Reform Volume Author/Editor: Michael D. Bordo and Barry Eichengreen, editors Volume Publisher: University of Chicago Press Volume ISBN: 0-226-06587-1 Volume URL: http://www.nber.org/books/bord93-1 Conference Date: October 3-6, 1991 Publication Date: January 1993 Chapter Title: The Collapse of the Bretton Woods Fixed Exchange Rate System Chapter Author: Peter M. Garber Chapter URL: http://www.nber.org/chapters/c6876 Chapter pages in book: (p. 461 - 494) 9 The Collapse of the Bretton Woods Fixed Exchange Rate System Peter M. Garber The collapse of the Bretton Woods system of fixed exchange rates was one of the most accurately and generally predicted of major economic events.’ Hind- sight, of course, sharpens the perception of the inevitability of events and makes great prophets of those members of the spectrum of analysts who hap- pened to get their predictions right. But the general outlines at least of the key events from 1967 through 1971 were foreseen, starting from the work of Trif- fin (1960), whose warnings provided the compass to policymakers imple- menting serious changes in the provision of liquidity and the administration of capital controls in a vain attempt to preserve the system. The heyday of Bretton Woods, during which the system actually operated as envisioned under full convertibility, lasted only from 1959 through 1968. Associated with steady growth in world production and trade, these nine years and the preceding decade of movement toward currency convertibility are considered something of a golden age in contrast to the six-year debacle of the interwar gold standard.
    [Show full text]
  • Download (Pdf)
    GOLD, THE DOLLAR AND OUR BALANCE OF PAYMENTS Remarks by Hugh D. Galusha, Jr. President Federal Reserve Bank of Minneapolis before the University Club of Milwaukee February 19, 1968 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis GOLD, THE DOLLAR AND OUR BALANCE OF PAYMENTS Hugh D. Galusha, Jr. President Federal Reserve Bank of Minneapolis Tonight, at Mr. Swanson’s suggestion, I am to talk about international monetary developments. This is almost impossible to square with our first con­ versation, when he warned me to stay away from serious subjects. Not even Mark Twain could extract much humor from the current situation, even though his reference to a gold mine as a hole in the ground owned by a liar might have some relevance to certain of the proposals advanced by proponents of an increase in the price of gold. But perhaps it is too harsh to characterize these proponents as "liars'1 -- it may be simply an excess of "deGaulle" that causes them to be so strident in their advocacy. And they are correct, at least in concentrating their attention on the barbarous metal, for it is the loss of gold from our monetary stocks that has enlarged the area of our anxiety over monetary policy and the U. S. dollar. Why this loss has occurred and what alternatives are being considered to alter the role of gold I will attempt to sketch for you this evening. To give the appearance of logic to this talk, I should, I suppose, start with a rational explanation of why gold is so highly prized in monetary systems.
    [Show full text]