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Less developed economy catching up with core economies create deep political instabilities. Sectors of core economies "refusal to adjust to new economic realities" become new losers with global trade. Characterized by support of extreme right and protectionist policies
One possible answer to those shifts could be for the hegemon to protect itself and shift the costs of adjustment to other economies (ex other developed countries)
As Nixon did when he developed the dollar on August 1971.
As Nixon did when he developed the dollar on August 1971.
"Mr. Enders: It’s against our interest to have gold in the system because for it to remain there it would result in it being evaluated periodically." https://www.bullionstar.com/blogs/koos-jansen/minutes-of-kissinger-meeting-on-gold-1974/
"a larger part of the official gold in the world is concentrated in Western Europe. This gives them the dominant position in world reserves and the dominant means of creating reserves. We’ve been trying to get away from that into a system in which we can control"
Domestic political instability ensued due to rising cost of the Vietnam war and USSR-USA cold war, surplus in some economic sectors increasing due to lack of market, demand. Devaluation of dollar ensued + policy increasing America's leverage over global trade. Death of gold.
After those Nixon gold policy, America pursued China friendly policy for temporary "win win" situation, keeping leverage over united Europe, China's market access+ cheap labor, countering and isolating the USSR, through Kissinger.
