The end of Bretton Woods On 15 August 1971 President Nixon took the US dollar off the Gold Exchange Standard. An international agreement had pegged the US dollar to gold (at $35 per ounce) since 1944, when the Bretton Woods conference in the US had established the post-war economic world order. All the major currencies now followed suit, leaving the US dollar as the one internationally recognized reserve currency. The immediate cause was the mounting trade and other deficits of the US, principally as a result of the war in Vietnam. The effect was to allow the US Government – and private corporations, banks and speculators – to manipulate the world’s financial system to their own advantage.
Shock and war The Yom Kippur War of October 1973 pitched Arab states against Israel once again, following their disastrous defeat in the ‘One Day’ war of 1967. This time Arab (and some other) states deployed their control of the world’s oil supply through the Organization of Oil Exporting Countries (OPEC). Not merely was the US the main sponsor of Israeli military supremacy: inflation and the devaluation of the US dollar since 1971 had slashed the value of oil exports. Embargoes and caps on oil production, co-ordinated by OPEC, quadrupled the price of oil in months. The ‘oil shock’ transferred billions of US dollars to the ruling élites of the OPEC states, who duly recycled them into their personal bank accounts abroad. Thus, in financial centres like New York, London and Zurich, the Lords of the Universe (and the Gnomes of Zurich) were born – and, along with them, the cancerous reproduction of footloose, candyfloss wealth.
