ABSTRACT
International trade shrunk to a mere trickle during the Great Depression as a result of "beggar-thy-neighbor" policies and protectionism, there was a remarkable upsurge of foreign trade during the postwar years. As a result of post war policies, there was a remarkable expansion of world trade, increased international division of labor, and significant positive "propensities to trade". In addition to rapidly expanding trade, a new Keynesian postwar institution, foreign aid, gained a foothold in the advanced capitalist world. Foreign aid was henceforth to be "tied", that is, the underdeveloped country could only purchase products made in the United States. In the sixties, the dollar gap was transformed into a dollar glut, and the United States suffered a so-called balance-of-payments problem. As in any market, there are many opportunities for windfall profits to be made by selling dollars and buying stronger currencies and gold, as long as the dollar continues to depreciate.
