Bretton-Woods To Now

The Bretton-Woods agreement signed in mid 1944 only lasted from 1945 to 1971 before too much paper and not enough gold meant the US gold reserves were depleting quickly as governments (especially France) redeemed US dollars for gold.

In 1966, when the Australian dollar was introduced, the international currency relationships were maintained under the Bretton-Woods system, a fixed exchange rate system using a U.S. dollar standard. The Australian dollar, however, was effectively pegged to the British pound at an equivalent value of approximately 1 gram of gold.

When the Bretton-Woods system broke down in 1971, Australia converted to the fluctuating rate agains the US$. Soon after,  under  Labour  Prime Minister Geoff Whitlam , who was unhappy with the fluctuations, Australia's dollar was valued against a basket of currencies called the trade weighted index (TWI). Then in December 1983 the Australian dollar was floated by Prime Minister Bob Hawke and treasurer Paul Keating, with the exchange rate reflecting the balance of payments and other market drivers.

Today there are huge fluctuations in the amounts of money in circulation. Most of it is not even printed, but created electronically when a loan is made. The quantity of money in circulation has only ever gone up since 1971, though theoretically it is possible for it to go down (though a depression would necessarily ensue).

There is more money  circulating since 1971, in approximately 160 currencies, than all the money created in the world since time began. Gold has not been an official money in any western country since 1971, or any country belonging to the I.M.F. (which has only 2 conditions for membership, one of which is not to use gold).

Many world economies have been largely influenced by the ideas of John Maynard Keynes, his ideas are now being challenged by the Austrian School of Economics.The works of Ludwig Von Mises, Hayek, Rothbard  and others are being critically analysed  with people such as David Evans and Prof Hans-Hermann Hoppe speaking on the subject world wide. (See links below for more information on these discussions)

Further Reading