In the previous part of our series, we told you about how monetary and economic policy affected what happened during World War II. Meanwhile, already at the time when it was coming to an end, a new global order was created.
Talking about the “new world” in the context of what happened after World War II is perfectly justified. Why? We already translate.
Although today it seems almost unreal to us, before the recent global conflict Europe was the center of the world. It was something natural. From the beginning of colonialism, countries from our continent dominated virtually the entire globe.
America has been a colony of Europe for centuries. Even the rise of the USA did not change this state of affairs. Although the United States was a superpower at the beginning of the 20th century, it decided the fate of World War I, joining this conflict, but it was still far away from the power it built later. The more so that they finally began a policy of isolationism, focusing on their problems.
Asia? Well, China was a weak enough state that in the 19th century they were dominated by European powers. The beginning of the 20th century did not change much in this field. Japan showed great powers, whose backbone was finally destroyed during World War II.
In turn, Africa was really a collection of British or French colonies. To this day, it does not count in global gameplay and it will not change over the years.
So when there were political and military earthquakes in Europe, the whole world collapsed. This happened in 1939. The Third Reich first attacked Poland, then Western Europe, and finally the USSR (due to the fact that the main part of this power lies in Europe, we do not include it in Asia).
It is worth emphasizing that before and during World War II we were dealing with a bipolar world. There were a few powers that wanted to dominate the world. It was still Great Britain, but it was only its shadow if it were compared with what it represented a century ago. On the continent, France had big, but smaller ambitions, which would probably be enough to be the “boss” of Europe and also the “sergeant” of Great Britain.
On the other side of the front we had the Third Reich, which was a power that planned to destroy the existing order. It is not true, however, that Germany wanted to defeat the United Kingdom. Hitler dreamed – especially in the first period of the conflict – of an alliance with this country. He really wanted England to let him to the table with the world map, so that he could draw lines he dreamed of.
We also had the USSR, which, which is particularly interesting, was in the late 1930s a more powerful power than Russia during the reign of the last tsars. Plus incomparably greater ambitions …
After all, the US, a country with a policy of isolationism, was a bit on the side of it all. Besides, President Roosevelt won the struggle for re-election only by promising voters that he would keep America away from the European “civil war”. Ultimately, however, he saw in World War a chance for his country to become the only power on the globe.
How to build a power?
Why did we write all of the above? To make the reader aware of how much the world has changed. In fact, World War II made it bipolar because it was taken over by the United States and the Soviet Union. In turn, however …
In 1943-1947, the US provided free assistance to its allies. They didn’t do it because her elite had such a good heart. First, it was about finding outlets for overproduction. The next stage of this policy was the Marshall Plan, which provided assistance to European countries in the form of conveniently constructed loans. Importantly, there was no difference here whether it was a defeated country or an ally. Almost from the machine, help was rejected and subordinated to the USSR Unit eastern.
However, the Marshall Plan had two main goals. Political: it was about stopping the expansion of communism. We note that after the First World War, the communist party sought to come to power in conflict-ravaged countries. The US knew that the Kremlin could now try to repeat this project of taking Europe not with T-34 tanks, but with democracy.
The second goal of the US elite plan was economic and cultural expansion (which is often overlooked). Europe was to be flooded with American products.
Ultimately, the US spent $ 17 billion on it. Europe has been rebuilt (specifically its western part), the threat of communism has reduced to a minimum, and its citizens have loved Uncle Sam and his products.
The Marshall Plan, however, was only part of the puzzle. The actual foundations of the post-war order were designed in 1944 in Bretton Woods.
The Bretton Woods system sealed something that is still a key element of US power today – the dominance of the dollar. Since then, the American currency has been worth 1/35 ounces of gold (today the price is obviously out of date), but it has become a global currency, which is still valid today. However, it could not be exchanged for gold. At least, citizens couldn’t. This type of transaction was only possible for exchanges between countries. Other countries also kept currency reserves in dollars. Again: not in gold, which thus replaced the US currency.
All this meant that the demand for dollars was huge, while course the currency was even underestimated. The authorities cleverly used it for foreign expansion (here the Marshall Plan reappears). As a consequence, the US began to conduct an inflationary policy.
The problem was that the inflationary effects of the dollar were somehow exported abroad. In other words, the US budget deficit was causing inflationbut not in the US, but in the rest of the world. To put it brutally, it began to resemble Germany’s policy during World War II, which they tried to build their power to bone economically conquered countries. In the case of the US, the matter was more cynical. Here, nobody conquered anyone militarily, and only an economic and monetary system was built that the power overseas benefited from. Historians still argue over whether it was part of a sly plan, or the effect of a combination of many favorable US circumstances.
However, nothing lasts forever, so at one point Europe began to rebel, which in effect gave rise to madness, the effects of which we still feel today. However, you will read more about this in the next episode of our series.
In the meantime, you can read more about Bretton Woods here. It is also worth getting interested in the subject of Bankor – something like a digital currency that was to become the foundation of a new, post-war order. You can read about this project here.