a conference in Paris, in March 1973, formally buried the financial arrangements so laboriously erected at Bretton Woods and agreed to establish in its place a new floating-rate system. The cost of this liberalization, predictably enough, was inflation. In the aftermath of the American move of August 1971 (and the subsequent fall in the value of the dollar) European governments, hoping to head off the anticipated economic downturn, adopted deliberately reflationary policies: allowing credit to ease, domestic prices to rise, and their own currencies to fall.
