I hate to be a nitpick, but Newton is the father of Classical mechanics/physics. Albert Einstein is credited for laying the foundation of Modern Physics. While classical physics deals with gravity, inertia and such modern physics handles more complex theories like wave-particle duality and conversion of mass into energy when it travels at the speed of light, also represented by the famous equation e=mc^2.

Regards,
Felicia

Also, why exactly was it bad that US gold reserves were going down in the 1970’s and why did Nixon axe the Breton Woods agreement? Did it mean the US’s international influence was declining- if so, wouldn’t Nixon’s actions hurt that influence even more?

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Each US dollar had a value of $35 per ounce, and only US dollars could be used to buy gold. All currencies were pegged to the value of the US dollar (global fixed exchange rate). Other countries needed to hold US dollars in order to buy gold for their own central banks and currencies. Pegged exchange rates have their place – as said in the article it ensures the value of a nation’s currency by pegging it to something else which in turn mitigates shocks to the financial system. Advantages include no exchange rate risk or inflation risk on loans made – very handy for massive lenders! This scheme was fine in the beginning but several things occurred which broke down the system.

Firstly, Europe was rebuilding after the war. Their economies were growing at a massive pace which made their national currencies more valuable. With the fixed exchange rates prevailing the European economies should have been able to buy more goods and services from the US over time but were unable to.

Second, each developed economy participating in the Bretton Woods system had to hold a certain amount of gold proportional to their money supply. Growing economies necessitated larger gold holdings. So what we saw in this period were gold outflows from the US to Europe.

Thirdly, with increasing US borrowing due largely to the escalation of the Vietnam War and lower US gold reserves European powers began to doubt the US’s ability to maintain the dollar-gold convertibility scheme. This was most famously noted by De Gaulle in 1965 who converted the whole US dollar holdings of France into gold.

The Bretton Woods system limped along for a few more years when the exchange rates first became a little more generous, then currencies were allowed to trade in a small trading range, but given that the US was wholly unable to convert all the gold holdings of other nations if requested and currencies were starting to converge in value it was recognised that the fundamental problems were too great and Nixon finally ended unconditional convertibility in August 1971. As said in the article the failure of the global financial system contributed in no small way to the inflation epidemic of the seventies with assistance from supply side shocks in oil and other products.

I can guess that the end of Bretton Woods didn’t have any major negative effects on US influence. All major participants knew the system was unsustainable and Nixon formally acknowledged that. The US dollar was still the global reserve currency but currencies were free to float against each other.

I hope you were asking because you liked it, not because you felt it was bad. I’m relatively new to music-making, so it’s difficult for me to self-assess.

I do, however, have several questions for anyone out there who can answer it: what exactly did it mean that only US dollars could be converted into gold? Did countries have to peg their currencies to the dollar? Did they have to trade consistently with the US to have a supply of dollars to work with? In general, why was it advantageous for only the US dollar to be convertible into gold?

Also, why exactly was it bad that US gold reserves were going down in the 1970’s and why did Nixon axe the Breton Woods agreement? Did it mean the US’s international influence was declining- if so, wouldn’t Nixon’s actions hurt that influence even more?

I’m sorry if these are stupid, common-sense questions. I just am genuinely confused and the matters aren’t explicitly addressed in the article, implying that you’re just supposed to know the answers due to common sense. So, I apologize if I lack the latter.

Thanks!