Money Matters: An IMF Exhibit -- The Importance of Global Cooperation

Destruction and Reconstruction (1945-1958)

Glossary

 

Conflict &
Cooperation
(1871 - 1944)

Destruction &
Reconstruction
(1945 - 1958)
The System
In Crisis

(1959 - 1971)
Reinventing
the System

(1972 - 1981)
Debt &
Transition

(1981 - 1989)
Globalization and Integration
(1989 - 1999)
 
 
 
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Money shortage:

Money shortage refers to a lack of currency acceptable as payment in world trade. At the end of World War II, the European countries had sold off most of their gold reserves to finance the war. Since their economies were in ruin and their currencies of little value, they were said to be suffering a money shortage.

 

Inflation:

Inflation refers to a rise in the general level of prices, and usually reflects the pursuit of too few goods by too much money. Normally, when governments see signs of inflation, they raise interest rates in order to damp demand relative to supply.

 

Devaluation:

Devaluation is a reduction in the price of a currency in terms of other currencies, brought about as a matter of policy. Governments lower the value of their currency relative to other currencies in order to make their country's products more competitive on world markets and thus to boost exports relative to imports. After World War II, many European countries devalued their currencies to help devastated local industries recover.

 

Currency convertibility:

A country's currency is convertible if any holder is free to convert it at market exchange rates into one of major international reserve currencies. A fundamental goal of the IMF is currency convertibility for current account transactions, which refer mainly to trade in goods and services.

 

Foreign investment:

Foreign investment is the acquisition of assets in one country by government, institutions, or individuals in another country. Foreign investment can be indirect (buying shares of existing enterprises in other countries) or direct (setting up subsidiaries and new enterprises in other countries).

 

Trade deficits:

Trade deficits occur when a country is spending more on imports than it receives from exports. As industries in Europe and Japan recovered from World War II, the United States began to develop balance of trade deficits with these countries since the value of goods bought from them exceeded the value of U.S. goods sold to them.

 

The Post War World Cooperation Tested Cooperation
     
Cooperation for Recovery: The Marshall Plan U.S. Dollars: Fueling
the Economy
Economic Miracles
in the 1950s

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