Class Notes (837,548)
Canada (510,312)

Poli Sci 2J03 Feb 10, 2014

4 Pages
Unlock Document

Political Science
Robert O' Brien

Started on: 2/6/14 9:40AM C LASS N OTES FOR : P OLI S CI 2J03 McMaster University, Winter 2014 M ONDAY , FEBRUARY 10, Y IMS Credit System IMS from fixed to floating and regional currencies Private and public credit Historical origins of the Modern System - Bretton Woods system - System that would underpin financial stability - New Hampshire 1944 - Set arrangements for IMS, Credit system o It was supposed to ensure economic growth! - Creation of the IMS, Dollar exchange standard and the World Bank - The IMS was created to try and help / underpin the international monetary system o It would lend country’s money on a short-term basis! o Would lend some money until obtaining some stability - WORLD BANK o Would lend money to countries on a long term basis o Originally it was set to help with the reconstruction of Europe o Developing countries also lobbied for money and so it was extended into the developing world - Western countries committed themselves to support free trade and open economies IMS - System, which governs the exchange of currencies - If you are going to have a global economy and international trade, there has to be some kind of functioning international monetary system - There has to be access to what is being sold and traded, etc. - Problems with gold standard, inter-war system o We’ve never designed the ‘perfect’IMS o Any system we’ve had has generated problems and issues o It keeps changing overtime! - In the 1800s there was the gold standard. o Allowed good to be sold between countries but did not allow economic growth - Interwar period (WWI and WWII) o Chaotic international monetary system. - It is always a problem that is being negotiated o After the second world there’s a new attempt at an international monetary system o Gold exchange standard o “Dollar” exchange standard  (1) The Americans to fix their value of their currency to gold • Acertain amount of gold  (2) Currencies linked to the American dollar at a particular rate Angie © McMaster University 1 Winter 2014 • All other currencies could be adjusted to the American dollar • Canadian dollar at par with theAmerican dollar - bad for manufacturing in Ontario o Stable and flexible  It allowed for changes overtime  The way it was designed was seen to bring all of the benefits of different kinds of monetary systems in this particular arrangement o The IMF was created as an institution to help with short term issues o Triffin’s dilemma  Triffin was anAmerican economist and looked at the system and said there was a fundamental flaw • American dollar was tied to Gold, but the Americans were spending huge amounts of money. Alot of money was flowing out of the United States, since American companies were investing in other parts of the world. • As American dollars float out into the system there was concern that there will be more American dollars outside of the USA, then there was gold inside the United States. • Tension between the flow of money outside of the United States versus the amount of gold that it had to back its currency. Credit system - System which governs the provision of loans - Credit, loans, etc. - All of the countries devastated by the world need money for rebuilding o International Bank for Reconstruction and Development (IBRD)  “World Bank” o Reconstruction for Europe and Japan and development! - Since economies were devastated, could not buyAmerican goods. - The bank did not actually have enough money - MARSHAL PLAN o 13 Billion in Grants o Congress spooked by communism o Excluded communist states, helped Euro integration o Countries like France and Italy might become communist in response to economic problem.
More Less

Related notes for POLSCI 2J03

Log In


Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.