Dollar glut
Encyclopedia
The dollar glut is a term for the accumulation of United States dollar
s outside of the United States, contrasted with the dollar gap that lead to the creation of the Marshall Plan
following World War II
. The eventual shift to a dollar glut forced the end of the gold standard
in the United States and led to the collapse of the Bretton Woods system
.
The stability of the Bretton Woods system
came to depend upon the ability of the U.S. government to exchange dollars for gold at $35 an ounce. The American ability to fulfill this commitment began to diminish as the postwar dollar shortage was transformed into an overabundance of dollars, or dollar glut.
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
s outside of the United States, contrasted with the dollar gap that lead to the creation of the Marshall Plan
Marshall Plan
The Marshall Plan was the large-scale American program to aid Europe where the United States gave monetary support to help rebuild European economies after the end of World War II in order to combat the spread of Soviet communism. The plan was in operation for four years beginning in April 1948...
following World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
. The eventual shift to a dollar glut forced the end of the gold standard
Gold standard
The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard...
in the United States and led to the collapse of the Bretton Woods system
Bretton Woods system
The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states in the mid 20th century...
.
The stability of the Bretton Woods system
Bretton Woods system
The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states in the mid 20th century...
came to depend upon the ability of the U.S. government to exchange dollars for gold at $35 an ounce. The American ability to fulfill this commitment began to diminish as the postwar dollar shortage was transformed into an overabundance of dollars, or dollar glut.