America revved up its engines and economy, went to war, and prevailed. As my grandfather stood watch on the Aleutian Islands, my grandmother riveted the planes.
And gold remained $35 an ounce.
Because the strongest winner makes the rules, the United States was able to set up a new world order. This privilege included the luxuries of placing the United Nations in New York, the World Bank and International Monetary Fund in Washington DC, and establishing its currency as the world's reserve, carefully pegged to the over half of the world's gold we controlled, at $35 an ounce. The world's currencies were then tied to the US Dollar, and a new gold standard, mediated by the US Dollar, was established and agreed at Bretton Woods.
By then the United States possessed about 50% of the worlds economy, and had run large trade surpluses since around 1870 (producing and exporting more to the rest of the world than it imported from the rest of the world). This made it the world's largest creditor nation.
Combining economic, political, and military might with a people perceived as united in the universal struggle towards Liberty and Justice for All, the world trusted the strength and integrity of the United States citizens, government and economy, and thus submitted to the new order.
And the price of gold remained $35.
Forward to 2.7 Cheating The Game and Breaking The Standard
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