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Presentation Tutorial 10 Summary

Presentation Tutorial 10 Summary - Danielle Kim Professor...

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Danielle Kim Professor Dow POLS2402 Capital Flows, Financial Crisis, and Attempts to Control Finance since Bretton Woods Frieden believes that the financial situation of the 1990s was very different from that of the 1970s. During the 1970s, a few LDCs and centrally planned economies negotiated loans from a few huge international banks. However, during the 1990s, governments and corporations in emerging economies were directly involved in the international financial system. When the Bretton Woods system was coming to an end, investors around the world were selling off the dollar because they expected President Nixon to devalue the US currency (Frieden 2006: 339). In order for the US to defend the dollar, the country would have to raise interest rates, cut spending, and restrain wages and profits. The US either needed to defend the dollar or “break the link to gold and devalue it” (Frieden 2006: 340). On August 15, 1971, President Nixon broke the tide of the US dollar and gold (Frieden 2006: 341).
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