Devaluation, a reduction, by law, in the amount of gold designated as the standard of value of the national monetary unit and a related lowering of its exchange value in relation to the currencies of other countries. Bourgeois governments use devaluations in an attempt to put an end to economic disarray (balance of payments crises, reduced competitiveness of national commodities on the home and foreign markets, disruption of normal money circulation and credit relations, and disorganisation of the reproduction process) at the expense of the working people, because a reduction in the purchasing power of currencies results in an increase of inflation and lower living standards. Before World War I and the general crisis of capitalism, when gold and silver money was in circulation alongside paper money and the banknotes were exchangeable for gold, devaluation was a tool for stabilising the currency that was employed when the value of paper money, previously diminished as a result of inflationary banknote issues, stabilised. Devaluation was usually followed by restoration of the exchange of paper money for gold. A salient feature of the age of the general crisis of capitalism is an increasing disarray of the monetary and financial system of capitalism (see Monetary Crisis). Since the Great Depression of 1929-33, devaluation has not, as a rule, entailed the restoration of paper money exchange for gold or silver. It can no longer stabilise national currencies. The post-World War II period has seen an ever expanding crisis of the 84 monetary and financial system of capitalism, as evidenced by regular devaluations of the currencies of capitalist countries, often occurring simultaneously in many countries. This was the case in 1949 and 1967, the devaluations being in relation to the US dollar rather than gold. By the early 1970s, the unprecedented scale of the militarisation of the economy and deterioration of the USA’s positions on the world capitalist market had resulted in a dramatic deterioration of the country’s balances of trade and payments. Other countries accumulated a tremendous amount of paper dollars, especially Eurodollars in Western Europe, while in 1971 the gold reserves of the USA fell to the lowest permissible margin. In this context, in the summer of 1971, the US Administration officially cancelled the exchange of paper dollars for gold and had to reduce the gold parity of the dollar by 7.89 per cent and increase the official gold price from $35 to $38 per troy ounce and in February 1973, by an additional 10 per cent, to $42.2 per troy ounce. Devaluation of the US dollar, the main reserve currency of the capitalist world, is a major manifestation of the crisis that has struck the monetary and financial system of imperialism. The devaluation briefly improved the position of the US monopolies on the world market, but did not succeed in halting a further drop in the purchasing power of the US dollar. The position of the British pound sterling and other currencies has been deteriorating. The increasingly acute crisis of the monetary and financial system has forced some capitalist countries, such as Britain, Italy, and France, to abandon fixed rates of exchange and let their currencies float in relation to other currencies. Drops in the rate of exchange in the process of floating are equivalent to devaluations. For the masses of the working people, devaluations bring nothing but a further decrease in their living standards resulting from price rises and an associated reduction of real wages. Devaluation of the currencies of developed capitalist countries deals a heavy blow to the economies of developing countries, which lose much of their export earnings.