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-Todays international financial system is private with besides marginal official participation. Showdown between government and banks during currency crisis of 1972. ?Smithsonian smashing of New Hampshire ,? allowed greater flexibility in currency values. In the 70?s U.S firms weren?t even loyal to the dollar. Sophisticated speculation playing a major role in international finance. Every maven is trying to cash in on exchange fluctuations ?leads and lags.? (I say why not) Central banks are well-favoured losers their intervention, and inflow of dollars was so large that it was inflationary. Lesson learned is that they cannot control private capital flows. Firms did protect themselves against the anticipated devaluation over a longer term by shifting the currency composition of liquid assets and debts, and by prepaying accounts payable in currencies expected to be devalued. In 1973 we basically exported inflation to Europe. No one is sure how close we came to a financial disaster in the 70?s, but it?s a fact that we were on the edge. *Franklin-Herstatt failure contained. planless rates survived.Chapter Four-The economics and Politics of Global Debt-In the nineteenth century, private banks helped countries cope with swings in the trade cycle and made emergency loans to keep governments afloat. A reason why bankers disliked the Bretton Woods Conference was that it created a competing man sector institution, the IMF, to provide short-term loans to countries experiencing trade and financial difficulties. The Third instauration owes the Western banking system over half a trillion dollars. incapacitated cause thinking we will be payed back. Global debt crisis had two primordial causes-importance of Third World countries in global banking revolution of 60?s and 70?s series of economic shocks that hit the world rescue in the 70?s.Richard Weinert lists four main factors that are responsible for the banks? expansionist thrust into the Third World in the 70?s table service client needs, defensive expansion to keep clients, earnings growth, and the opportunities offered by Eurocurrency markets. Economic shock of 70?s inflation, dramatic increase in cover prices, and slowdown in world economic growth (recession on 74-75), eminent interest rates.