Bretton Woods system

Long ago, after a big war, leaders from 44 countries met in a fancy hotel in a place called Bretton Woods. They wanted to make sure countries could trade with each other without arguments. They decided to make a special plan for money. This plan was like a set of rules for how countries would exchange their money, kind of like trading cards but with real money!

The most important rule was about American dollars and gold. Countries agreed that their money was worth a certain amount of American dollars. And the American dollar was special because it was worth a certain amount of gold! It was like the dollar was a special key that could be traded for real gold bars. This made the dollar very strong and trusted by everyone.

This money system helped countries be friends. Before, some countries would make their money worth less to make their toys cheaper to buy. This made other countries angry! The Bretton Woods plan stopped this. It created a team called the International Monetary Fund (IMF) to help countries if they had trouble and to make sure everyone played fair with their money values.

For a long time, this system worked really well. But then, things changed. In 1971, the United States decided it couldn't promise to trade dollars for gold anymore. This was a huge change! It was like the special key stopped working. After that, the rules changed again, and countries started letting their money values float more freely, like balloons in the wind.