Of course, the United States did not start the Vietnam War to break the gold standard. The causal connection was this: the war worsened deficits, increased inflationary pressures, and made Bretton Woods unsustainable. Washington understood the connection but allowed the war to continue. When the system broke down, it used the crisis to build a more flexible dollar-based monetary regime under its own control.
However, Washington was not content merely protecting its gold reserves. In a 1974 meeting with Henry Kissinger, Assistant Secretary of State Thomas Enders declared that a stronger role for gold would benefit Europe, which held a larger share of the world’s gold reserves. The United States instead wanted to shift the system to the International Monetary Fund (IMF) and Special Drawing Rights, an international reserve asset created by the fund. The discussion reveals a struggle over geopolitical power, not simply a technical currency reform.
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Anthropologist David Graeber has shown how pointless bureaucracy disrupts operations, while neuroscience journalist David Rock has explained how constant pressure and hierarchies impair focus, judgment, cooperation, and problem solving. More intense work can therefore reduce real efficiency and at the same time discipline employees. The cult of ever-harder work served an economic function even as it failed to produce more.
Critics of Keynesianism turned stagflation into an ideological weapon. The combination of war, oil scarcity, and currency turbulence became evidence that the welfare state had failed. Instead of adapting Keynesian policies pragmatically to changed circumstances, low inflation became the overriding objective, rendering full employment and rising wages “impossible.”