Was the Bretton Woods System successful?

What is Bretton Woods System? The end of World War II marked the beginning of a new era of world economy. The Bretton Woods system is an agreement concluded at an international conference (and later in the United States of America) between 44 countries held at Bretton Woods, New Hampshire State, USA on July 22, 1944. Its purpose is to maintain the stability of the currency system. In the era after the Second World War. "In order to secure international trade and post-war reconstruction funds, Member States agreed to determine the exchange rate by linking the currency to the United States.

Following the Bretton Woods Agreement in 1944, the currency management of the Bretton Woods System enacted regulations for commerce and financial relations between the United States, Canada, Western Europe, Australia, and Japan. The Bretton Woods scheme is the first example of a fully agreed monetary policy designed to manage monetary relations between independent countries. The main feature of the Bretton Woods system is the obligation to adopt monetary policy to keep foreign exchange rate within 1% by linking the currency to money and filling the imbalance between temporary payment of the IMF is. Furthermore, it is necessary to tackle the lack of cooperation among other countries and prevention of devaluation due to currency competition.

The Bretton Woods currency system is opposite in many ways from the prewar system. The prewar system was almost a coincidence; the Bretton Woods system was carefully negotiated and developed by policy makers and experts (the same name at the Bretton Woods conference in New Hampshire in 1944). The prewar system addressed the "impossible trinity" by sacrificing monetary policy to achieve international goals; the Bretton Woods system limits international capital flows by implementing control measures To do. Under the Bretton Woods regime, gold-supported dollar became the world's reserve currency, reflecting the status of the United States as the world's leading country after the Second World War.

The main reason why the Bretton Woods system collapsed is that the inflation monetary policy is not suitable for the major currency countries of the system. The Bretton Woods system is based on rules, the most important of which is to follow financial and fiscal policies consistent with civil servants. The United States violated this rule after 1965. This has become a privilege seemingly aspiring to the US to abandon. Overrated currencies and sustained trade deficit are good for American consumers, but it is painful for producers. The accumulation of reserves over the past 20 years is closely related to the surge in the US current account deficit. Imports are growing more rapidly than exports and the number of new jobs in export industries is insufficient to absorb workers driven to intensifying foreign competition. Tariffs can not solve this problem. The gap of the current account is a product of the basic financial flow and the import tax raises the dollar only in a destructive way only.