the bretton woods system was basically the post war attempt to make the global economy less chaotic.
in 1944, countries agreed to tie their currencies to the us dollar, while the dollar itself was tied to gold. it also helped create the imf and world bank.
the system fell apart after the us stopped converting dollars into gold in 1971, but its biggest legacy is still everywhere: the dollar became the center of the global financial system.
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bretton woods didn’t make the u.s. a superpower by itself. world war ii had already left america as one of the world’s dominant economic and military powers.
but bretton woods helped lock that advantage into the global financial system.
the u.s. held about three quarters of the world’s official gold reserves, other currencies were tied to the dollar, and the dollar was tied to gold at $35 an ounce. suddenly, countries around the world needed dollars for reserves and international payments.
so america didn’t just have the biggest economy. its currency became part of the infrastructure of the global economy.
even after the gold link ended in 1971, that central role of the dollar survived.
