This chapter argues that the key deep underlying fundamental for the growing international imbalances leading to the collapse of the Bretton Woods System between 1971 and 1973 was rising US inflation since 1965. It was driven in turn by expansionary fiscal and monetary policies - the elephant in...

Controlling inflation is among the most important objectives of economic policy. By maintaining price stability, policy makers are able to reduce uncertainty, improve price-monitoring mechanisms, and facilitate more efficient planning and allocation of resources, thereby raising productivity....