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

System in Crisis (1959-1971)

Part 5 of 7

Conflict &
(1871 - 1944)

Destruction &

(1945 - 1958)
The System
in Crisis
(1959 - 1971)
the System

(1972 - 1981)
Debt &

(1981 - 1989)
Globalization and Integration
(1989 - 1999)

The Incredible Shrinking Gold Supply

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While the total number of U.S. dollars circulating in the United States and abroad steadily grew, the U.S. gold reserves backing those dollars steadily dwindled. International financial leaders suspected that the United States would be forced either to devalue the dollar or stop redeeming dollars for gold.

The dollar problem was particularly troubling because of the mounting number of dollars held by foreign central banks and governments:

  • In 1966, foreign central banks and governments held over 14 billion U.S. dollars. The United States had $13.2 billion in gold reserves, but only $3.2 billion of that was available to cover foreign dollar holdings. The rest was needed to cover domestic holdings.

If governments and foreign central banks tried to convert even a quarter of their holdings at one time, the United States would not be able to honor its obligations.



The incredible shrinking gold



A Growing Economy Needs Growing Liquidity

and Development

The Foreign Exchange Famine
The Dollar Glut The Incredible Shrinking Gold Supply Searching
for Solutions
Bretton Woods
System Collapses

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