A New New Deal

In early 1971, as the Treasury found it increasingly difficult to honor convertibility between the US dollar and gold, the dollar fell in value. In late 1973, objecting to Western support of Israel in the Yom Kippur War, the Organization of Petroleum Exporting Countries levied an embargo that quadrupled the price of gasoline in the United States. The decades of delicate balance abruptly drew to an end, and the era of government austerity and privatization represented by Ronald Reagan and Margaret Thatcher would shortly follow. One crucial effect of the turmoil of the early seventies was that the financial industry—along with less than ideally democratic institutions such as the European Union, the World Bank, and the International Monetary Fund—grew at the expense of what might be called real democratic checks and balances to their authority.

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