Nama : Faiz Hendra k

NIM : I92218076

International Monetary System

Introduction

The inability of the United States to control international currency exchanges is due to
the weakening of the American economy, which is characterized by an imbalance in
American exports and imports and the high costs incurred by America in the Vietnam war.
Then Susan Strange uses the term Capitalism Casino to describe the distance between the ups
and downs of prices in the international exchange rate system.

The collapse of Bretton Woods

America as a guarantor of world currency exchange rates are required to continue to

stabilize economic conditions in the country. But in 1970 the Bretton Woods system
experienced a problem which was inflation experienced by the US. This happens because the
US is printing too many dollars to guarantee global dollad supplies. In addition to
maintaining the availability of the dollar at that time the US also printed a large amount of
dollars to finance the Vietnam war which eventually the US had to accept defeat. These two
conditions affect the stability of the US economy.

Because so many countries want to exchange dollars for gold while US gold reserves
are getting thinner so that makes the US outsmart by printing dollars with large amounts. By
this it means that the US is circulating large dollars. Besides this situation is also in line with
the increasing number of unemployed in the US. In addition to inflation there is also another
impact, namely the existence of overvalues due to excessive strengthening of the Dollar. As a
result, the price of goods becomes expensive so that US products are not competitive. In this
phase, the US experienced a dilemma because at that time US President Richard Nixon was
heading for the election process. So this becomes a consideration whether the US will resolve
their domestic problems or remain to the US international commitment as the person in
charge of the international monetary system. After passing through considerations the US
finally took a policy to improve the domestic situation. In order for US products to sell again,
the US stopped the activity of exchanging dollars and gold. Then did the US devalue its
currency by 10% so that the Bretton Woods system was agreed to end.
Casino Capitalism in International Political Economy

The new conditions experienced by the international economic world according to

Susan Strange are the same as gambling games in casinos. One indicator of Casino
Capitalism is the large number of conventional banks going to investment banks. The simple
purpose of Casino Capitalism is like playing gambling in a casino where each player can
suddenly become rich, and vice versa players can suddenly become poor. In its
implementation, each international economic actor hands over the value of the currency on
the international market, which is a vulnerable mechanism. International economic actors
must at all times observe currency movements and secure their budgets. To address this
problem, European countries have formed a European Monetary System that has developed
in the agreement to establish a single currency in the European region. This was done because
of concerns of European countries because of the instability of the international economic
situation.