How the Viet-war ended the gold standard
The hugely respected Joel Kurtzman, erstwhile editor of Harvard Business Review coined the term ‘Death of money’. Little did people know how meaningful it would be in their lives. Stuck between the double-trouble of widening balance of payment deficit and trade deficit on account of the Vietnam war and increased domestic spending, US rampantly printed dollars to fuel its war expenses. As a result, the gold backup for the paper dollar fell from 55% to a meagre 22%. Considering the deterioration in dollar’s position, countries with dollar holdings started to demand gold against the dollar, which meant a sharp fall in dollar’s value.
57To counter the situation, President Richard Nixon, in a shock to the world, closed the gold window making the dollar non-convertible to gold directly. It simply meant that gold standards were no more applicable to the dollar. In the short term, it seemingly saved the US from a currency crisis; but in the long run, it created even bigger threats for the entire world. It is because of this move that today we see non-existing electronic currencies building up castles in thin air and then destroying them within seconds. The modern financial world has moved far from reality.
The hugely respected Joel Kurtzman, erstwhile editor of Harvard Business Review coined the term ‘Death of money’. Little did people know how meaningful it would be in their lives. Stuck between the double-trouble of widening balance of payment deficit and trade deficit on account of the Vietnam war and increased domestic spending, US rampantly printed dollars to fuel its war expenses. As a result, the gold backup for the paper dollar fell from 55% to a meagre 22%. Considering the deterioration in dollar’s position, countries with dollar holdings started to demand gold against the dollar, which meant a sharp fall in dollar’s value.
57To counter the situation, President Richard Nixon, in a shock to the world, closed the gold window making the dollar non-convertible to gold directly. It simply meant that gold standards were no more applicable to the dollar. In the short term, it seemingly saved the US from a currency crisis; but in the long run, it created even bigger threats for the entire world. It is because of this move that today we see non-existing electronic currencies building up castles in thin air and then destroying them within seconds. The modern financial world has moved far from reality.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
IIPM – FLP (Flexi Learning Program)
