The meeting in dilemma (after Robert Triffin, 1959) points a constructional defect out of the Bretton Woods system.

Under the limited gold reserves liquidity needed for the world-wide trade was possible only by the release additional US Dollar. From it however deficits in the balance of payments resulted to the USA.

Under the Bretton Woods system the dollar was coupled at gold and the remaining currencies to the dollar. If the states under this system increase their money supplies, they must put on higher dollar reserves for covering. The USA have however no possibility of creating more gold for covering this inquired dollar. That leads to it, a ever larger dollar quantity no longer by gold covered is and finally to a confidence loss into the dollar.

If now a member of the system liked to back-exchange its dollar for gold, perhaps then the quantity of gold, reproached in the USA, is sufficient not (France 1971), because too many dollar in circulation are and faces those too little covering in gold.

Articles in category "Meeting in dilemma"

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