Presentation Tutorial 10 Notes

Presentation Tutorial 10 Notes - Danielle Kim, October 6...

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Danielle Kim, October 6 POLS2402 Capital flows, financial crisis and attempts to control finance since Bretton Woods On financial capital: “Freewheeling trade, money and finance sometimes careened into economic crises of frightening speed and size” (Frieden 2006, p.386). What were the advantages and disadvantages of these developments? Frieden is saying 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. End of Bretton Woods Investors around the world were selling off the dollar because they expected President Nixon to devalue the US currency (p.339). Under the Bretton Woods system, other governments could redeem dollars for gold. Since they expected that the dollar would be devalued—its gold value would be reduced —it made sense to get rid of as many dollars as possible. Prices in the US were rising faster than prices abroad, so foreigners bought less from the US while Americans bought more from abroad.
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This note was uploaded on 02/16/2012 for the course POLS 2402 taught by Professor Dow during the Three '11 term at Queensland.

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Presentation Tutorial 10 Notes - Danielle Kim, October 6...

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