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The Globalizing Economy

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Political Studies
POLS 375
Jason Zorbas

The Globalizing Economy February-25-13 9:27 AM Collapse of the Bretton Woods System Creation of the G7 Canadian Foreign Aid African Debt Collapse of Bretton Woods  Countries wanted to micro-manage the economy as much as they could and embrace free trade, which is incredibly contradictory.  We had an international system of fixed monetary value: currencies were pegged to the U.S. dollar; the U.S. dollar was tied to gold… everyone knew how much the currency worth.  This system was considered to be unproductive and didn't produce the results that were expected.  GM, Chrysler and Ford were guaranteed to make money… which made them redundant. o As the rest of the global economy recovers, America is starting to feel the strain of prepping up other economies via their currency.  Nixon Shock o Inflation was wild during Nixon Administration.  The bad thing about inflation. o Prices go up and can destroy savings, and an economy.  Nixon is concerned! o Appoints John Connally as Treasury Secretary and the Shocks were largely his brainchild.  Suspends the ability to convert U.S. dollars into gold.  Decides "Gold Standard" is ghetto! o Canadian exports to U.S. would eventually face an additional 10% tariff.  It does not help that Trudeau and Nixon dislike each other.  Henry Kissinger o Starting to recognize that U.S. is pissing off other countries in a very big way.  Connally o Essentially minimized and removes 10% rule four months later. o They never go back on the G
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