Balance of Payments and Exchange Rate Systems

On August 15, 1971, the United States officially abandoned its commitment to sell gold, imposed a ten per cent surcharge on imported goods and excluded foreign-made investment goods from the proposed Job Development Credit. The evidence accumulated since that time--including further fluctuation in exchange rates and accelerating inflation in virtually every major country--casts doubt on the long-run wisdom of attempting to cure domestic economic problems with major exchange rate changes.