Why Don’t We Rule the World?

Towards the end of World War Two, when it became obvious that the allies were going to win and dictate the post war environment, the major world economic powers met at Bretton Woods, a luxury resort in New Hampshire in July of 1944, and hammered out the Bretton Woods agreement for international finance. The British Pound lost its position as the global trade and reserve currency to the US dollar (part of the price demanded by Roosevelt in exchange for the US entry into the war). Absent the economic advantages of being the world’s “go-to” currency, Britain was forced to nationalize the Bank of England in 1946. The Bretton Woods agreement, ratified in 1945, in addition to making the dollar the global reserve and trade currency, obligated the signatory nations to tie their currencies to the dollar. The nations that ratified Bretton Woods did so on two conditions. The first was that the Federal Reserve would refrain from over-printing the dollar as a means to loot real products and produce from other nations in exchange for ink and paper; basically an imperial tax. That assurance was backed up by the second requirement, which was that the US dollar would always be convertible to gold at $35 per ounce.