The author had already become involved with the subject of this book
when President Nixon suspended the convertibility of the dollar on
August 15, 1971. This declaration was equivalent to an official
admission of the previously evident failure of the inter- national
monetary system established in Bretton Woods after long and difficult
negotiations. Although the real reasons for this failure are much deeper
and more complex, the immediate cause was the tremendous outjlow of
money from the United States to Europe and Japan. Never before had
economic history recorded a currency movement of such magnitude,
although during the periods preceding the devaluation of the French
franc and the re- valuation of the Deutsche Mark (Le., by the end of
1968 and mostly in 1969), and particularly at the beginning of 1971, the
in- ternational flow of money grew to such huge proportions as to alm
ost traumatize the economic and financial circles of developed
capitalist countries. These economic and financial circles correctly
foresaw that the ever growing and hardly controllable volume of currency
flow could seriously endanger the already precarious balance of the
international financial system and perhaps even upset it. This brief
analysis, in contrast to many other predictions of cur- rency
developments, holds true for a longer period as well.