Page 124 - TrumpsEconEra_Flat

5: THE FED ON

STEROIDS

even hundred and thirty delegates attended the
SBretton Woods Conference in 1944 from 44
Allied nations to establish an international monetary
system. Countries agreed to peg their currencies to gold
in a semi-fixed exchange rate system. The dollar
became the standard when America exchanged dollars
at the rate of $35 per ounce of gold.

The Vietnam War and President Lyndon
Johnson’s Great Society Programs of the 1960’s
drained the U.S. coffers and increased our national
debt—undermining the backing of the dollar by gold.
Because the 1970’s was a decade of differing inflation
rates, it became impossible to trade using fixed
exchange rates. President Richard Nixon severed the
link to gold when he closed the gold window in August
of 1971, disallowing convertibility.

OPEC agreed to sell their oil for dollars in 1975
when America and Saudi Arabia joined forces. America
offered military protection and weapons, and Saudi
Arabia promised to accept dollars and to buy U.S.

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