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What Was The Desire Behind The Bretton Woods Agreement Mcq

Post-war global capitalism suffered from a huge shortage of dollars. The U.S. had huge trade surpluses and U.S. reserves were huge and growing. It was necessary to reverse this river. Although all nations wanted to buy U.S. exports, the dollars had to leave the United States and be available for international use so that they could do so. In other words, the United States should reverse global prosperity imbalances by chartering a trade deficit financed by the U.S. outfed of reserves to other nations (a deficit in the U.S.

fiscal balance). The United States could have a financial deficit, either by building plants, or by building plants, or by foreign nations. Remember that speculative investments were discouraged by the Bretton Woods agreement. Imports from other nations were not attractive in the 1950s because American technology was up to date at that time. This is how multinationals and global aid from the United States originated. [29] The Bretton Woods rules, set out in the articles of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), provide for a fixed exchange rate system. The rules also aimed to promote an open system by requiring members to convert their respective currencies into other currencies and to make free trade. In early 1945, Bernard Baruch described the spirit of Bretton Woods as follows: “If we can put an end to labour subsidies and southerly competition in export markets” and prevent the reconstruction of war machines, “… Oh, my boy, my boy, what long-term prosperity we`re going to have. [20] The United States therefore uses its position of influence to reopen and control the [rules] of the global economy, in order to allow unfettered access to markets and materials of all nations. There was broad consensus among powerful nations that the lack of exchange rate coordination during the interwar period had exacerbated political tensions. This facilitated the decisions of the Bretton Woods conference.

In addition, all the Bretton Woods governments agreed that the monetary chaos of the interwar period had brought some valuable lessons. It is therefore tempting to say that the central bank and Fiat`s money was created as a by-product of public financing. The granting of monopoly power to these private banks has been the desire to have access to cheap and reliable sources of financing for the government and to refrain from relying excessively on the market. In the end, these increasing debt burdens ended up in the cycle of the Central Bank, in episodes of monetization, which experienced Europe`s first experiments on the convertible currency of Fiat. The first half of the 20th century was marked by two world wars that caused enormous physical and economic destruction in Europe and a great depression that wreaked economic havoc in both Europe and the United States. These events have sparked the desire to create a new international monetary system that would stabilize exchange rates without fully supporting currencies with gold; Reducing the frequency and severity of balance-of-payments deficits (which occur when more foreign currencies leave a country than they are); to eliminate destructive mercantilist trade policies, such as competitive devaluations and currency restrictions, while significantly preserving each country`s ability to pursue an independent economic policy. Multilateral discussions took place in July 1944 at the UNITED Nations Monetary and Financial Conference in Bretton Woods, New Hampshire, USA. Delegates representing 44 countries drafted the articles of the treaty for a proposed International Monetary Fund to oversee the new international monetary system.