The history man
In the early 1960s, the United States had 350,000 military troops in West Germany. At a glance, this fact might not seem relevant to international monetary policy. But as Francis Gavin pointed out in a 2004 book on the subject, it mattered to U.S. policymakers: Dollars were being sent overseas and staying there. “One of the largest burdens on U.S. accounts abroad that put pressure on the currency was military spending,” says Gavin, who is now a political science professor at MIT. “And one of the largest parts of military spending was having people, and their families, abroad.” Indeed, as Gavin asserted in that book, “Gold, Dollars, and Power,” four consecutive presidential administrations in the U.S., from Dwight Eisenhower’s through Richard Nixon’s, were “obsessed with trying to end the U.S. payments imbalance and gold outflow without jeopardizing America’s vast political and military commitments around the world.” This tension was a major reason...