Bretton Woods - IMF - Lay View

A good lay person's article simply explaining the Bretton Woods System and IMF. I am not in agreement with all of it, but here's the requested post.

Bretton Woods - IMF

How I learned to stop worrying and love the IMF
by Econ Tim

A short history of international monetary policy really begins in 1944 at a place with the improbable name of Bretton Woods, in New “Live Tax Free or Die” Hampshire. At Bretton Woods, the soon to be victorious Allies (the Soviet Union had an excused absence as they were actually fighting a freaking war at the time) brainstormed about how such a horrible war could be avoided in the future and they could make piles and piles of money. (This sounds a little crass, but it really was what they were doing.)

The idea they came up with was a World Bank and the International Monetary Fund. The World Bank would make loans for rebuilding the tattered economies of rapidly becoming unoccupied Europe and the International Monetary Fund would ensure stability by creating a system of currency conversion. The idea behind the IMF/Bretton Woods system was that every country would make their currency worth a certain amount of dollars, e.g. $1 = .6 English Pounds. In fact, many countries didn’t even bother and adopted the dollar. Only in cases where some fundamental problem developed would they change that value.

The dollar would be fixed to $35 an ounce. Ideally, you could take $35 to Fort Knox and say, “One ounce of gold, please.” In reality, it was merely a paper arrangement backed up by a number of restrictions on gold ownership. ...Article Continued