POLI 445 Lecture Notes - Lecture 10: Bretton Woods Conference, Reserve Currency, Bancor
2 Jan 2020
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Document Summary
Senate or president these questions were asked during great depression. Federal reserve think that they start operate as one institution rather than having regional banks etc: federal reserve: chief manager of u. s dollar. In 1960"s, federal reserve is a national institution directing national currency however; there is an international problem of liquidity. Bretton woods conference; that is why keynes proposed bancor; an international currency which would have limited the dollar liquidity problem. For liquidity to be available; u. s should push u. s dollars out. This advantage that allies have; they do not want to give up. Could constrain domestic policy, to increase confidence in the dollar. So when you devalue the dollar and change usd/gold relationship; chain reaction happens and the other currencies would devalue. Created mass unemployment; slow down investments, manufacturing industries. If they increase interest rates; it won"t help them as in terms of domestic transactions they would have problems.
