"And the dollar at the time was fully backed by Gold. So it was a global Gold standard."
First, the dollar was not fully backed by gold, besides American citizens were not allowed to hold monetary gold and much less to ask for their dollars to be converted into gold. Second, the American Federal Reserve System could print has many dollars as it wished without having to add a single ounce of gold to its reserves and that it was what they did.
"The U.S. – by far the wealthiest and most stable Western country –basically dominated international monetary arrangements. The Bretton Woods system, therefore,never actually became a convertible system of international currencies into gold as the agreement seemed to imply, but instead was effectively a dollar standard, with the dollar pegged to a fixed price of gold.
The Triffin Dilemma, as it became known, is that there was no practical way for the U.S. to provide sufficient dollars to satisfy the world’s liquidity needs for trade and international capital transactions and simultaneously limit the number of dollars to guarantee that they could be redeemed for gold at a fixed price.
"In the Bretton Woods system put in place in 1944, U.S. dollars were convertible to gold between countries. In France, it was called "America's exorbitant privilege"[2] as it resulted in an "asymmetric financial system" where foreigners "see themselves supporting American living standards and subsidizing American multinationals".
As American economist Barry Eichengreen summarized: "It costs only a few cents for the Bureau of Engraving and Printing to produce a $100 bill, but other countries had to pony up $100 of actual goods in order to obtain one."
The balance-of-payments dilemmaIn order to maintain the Bretton Woods system, the US had to run a balance of payments current account deficit to provide liquidity for the conversion of gold into U.S. dollars. With more US dollars in the system than were backed with gold under the Bretton Woods agreement, the US dollar was overvalued. ..
Foreign speculators did not directly contribute to the gold flow out of the US, as under the Bretton Woods Agreement, only governments could exchange US currency for physical gold. Additionally, while the Bretton Woods Agreement was in place, direct speculation by US citizens did not contribute to the price imbalance and arbitrage opportunity due to wide disparity of gold prices between the US and other markets, since US citizens were banned from owning any gold other than jewelry following Executive Order 6102, enacted in 1933 by President Franklin D. Roosevelt to allow the US Government to confiscate all gold coinage, gold certificates, and gold bullion held by any citizen...
This led to less gold in the country and caused the US Dollar to become even more overvalued relative to the US gold reserves, leading to a self-propagating cycle. Furthermore, the US had to run a balance of payments current account surplus to maintain confidence in the US dollar.As a result, the United States was faced with a dilemma because it is not possible to run a balance of payments current account deficit and surplus at the same time.
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