also thank you for sharing donkeypong, this article really sparked my interest
to be honest i had no idea what the Bretton Woods system was going in. i ended up googling it and getting a nice little history lesson from wikipedia about how the USD essentially became the worlds reserve currency at the allied bretton woods conference during WWII.
if i understood it all correctly...: during the bretton woods conference, many prominent nations agreed that international currencies would pegged to the USD, and the USD was to be pegged to gold. this meant that the US was backing every single dollar internationally with gold. this move seemed to make sense to other nations because the US had the largest gold reserves by a mile at the time (and nations were scrambling for some economic certainty during the war). fast forward to the 70s, the US has depleted a lot of its gold reserves, and a few countries are jumping ship because of this. shortly after, the US halted the ability for nations to convert their currencies into gold, effectively ending the bretton woods system. this process weakened the dollar a bit, but ultimately the US came out ahead: many countries still peg their currencies to the USD despite its faults, allowing it to remain the worlds reserve currency.
hope u enjoy the fun facts, and please correct me if im wrong
fuznuts: good guesses, they are really the only 2 countries i can think of that have large bond holdings and would be looking to sell.
newb question here, but are there any other nations that might have infused Belgium with the cash for these bonds besides the US? perhaps even a joint effort?
My understanding from the article is that there can be no other possible source for this money besides the US or Europe, and Europe's central bank does not have the capability to suddenly create that many Euros for one of its countries. In fact, I believe that the Euro zone must rely on private banks to create money, while the US Fed can keep printing away (figuratively speaking, since it is really just creating zeroes on a computer screen). So basically, that had to have been US money/debt.
Glad you got a good history lesson. Bretton Woods set the foundation for the monetary system we have now. Sometimes you will hear the term "Bretton Woods institutions" used to describe the IMF and World Bank, which were created from those meetings. Those institutions have helped a lot of people, but they also have been corrupted and done some very bad things. You have to respect the people that created the system, since they were dealing with the fallout from a disaster (WW2) that nearly wrecked Western civilization and a good part of Asia and the Pacific also. They were dealing with pressures we can't relate to these days.
Some of what they created was very beneficial for the world. Europe was in a very dire situation and the US was in a position to help rebuild it, so the US got to dictate those terms, including the fact that it would be the world's de facto banker, the one that could effectively print money and issue debt in such a large way. Today, we have a system that has spiraled way beyond anything that they probably envisioned back then. Their intentions weren't bad, though they probably deserve some blame for enabling this mess of debt. It's been the modern banks, corporations, rich individuals, and politicians who have become greedy to the point of exploiting and corrupting the system.
The mess we have now is unsustainable and requires real reform. Unfortunately, most people do not understand how it all works, and the majority of people who do are benefiting from this status quo. It may take a real crisis before people demand change. One neat thing about Bitcoin and Bitshares is that they can help force change from the ground up. Change can be good or bad, but at this point, things need to be shaken up. Grassroots change that helps real people can become a building block for something better.