> No kidding. Lots of factors: U.S. inflation, partly driven by the effort
>> of funding the Vietnam War; the crisis of the Keynesian/full employment
>> model worldwide; erosion of U.S. hegemony and rise of competitive powers, to
>> name a few.
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In my opinion Bretton Woods was kind of the last gasp of the gold standard. Prices and therefore wages (via productivity) were ultimately anchored to those in the US. In chronic balance-of-payments deficit countries like Australia in the 1950s and 60s policy was forced to disinflate several times to avoid running out of dollar reserves; it killed the 'full employment' commitment before the 1970s. And Australia was a chronic deficit country in large part because of the massive commodity price spike during the Korean War, which ratcheted up domestic prices and wages permanently while export prices dropped right back. Then when the US started getting all inflationary it was transmitted everywhere. Not having exchange rate flexibility was really constraining for policy.
Cheers, Mike Beggs