1970s economic decline (1 jan 1970 ano – 1 jan 1980 ano)

Descrição:

In the early 1970s, an economic decline started. The international monetary system had been based off of the American dollar, but U.S. spending on foreign aid and wars weakened the currency. Nixon stopped the exchange of U.S. currency for gold, the dollar fell sharply, and inflation accelerated worldwide.

Even worse was the increase in the price of energy and a decrease in its availability due to tensions in the Middle East–specifically the Six-Day war between Israel and Egypt, Jordan, and Syria– which was the main supplier of oil. OPEC, the Organization of Petroleum Exporting Countries presented a unified front against Western oil companies. Egypt and Syria retaliated against Israel in the fourth Arab-Israeli war. With U.S. aid, Israel won. Arab OPEC members declared an embargo on oil shipments to industrialized nations that supported Israel. Oil prices skyrocketed, with little help from international governments.

The period endured the worst economic decline since the 1930s. Unemployment rose, productivity and living standards declined, and inflation soared. Newly-coined term stagflation described the combination of low growth and high inflation. The world gradually recovered until an Islamic revolution staged a coup in Iran, and the global economy suffered a second oil shock.

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