Core Insights - Volvo Cars experienced a significant decline in profits for 2025, attributing the downturn to U.S. tariffs and the strengthening of the Swedish krona [1][4] Financial Performance - The company's EBIT fell to 0.3 billion kronor ($33.3 million) in 2025, adjusted to 12.5 billion kronor after accounting for an 11.4 billion kronor impairment charge and a 0.8 billion kronor restructuring cost, a sharp decrease from 22.3 billion kronor in 2024 [2] - In Q4 2025, profits dropped by 51% year-over-year, with EBIT decreasing from 3.9 billion kronor in 2024 to 1.9 billion kronor [3] - Q4 revenue declined to 94.4 billion kronor from 112.1 billion kronor in the same period of 2024, while full-year retail sales fell 7% to 710,000 vehicles and wholesale sales dropped 11% to 693,000 vehicles [4] Market Challenges - External factors such as EU-US import tariffs, a stronger Swedish krona, weak demand affecting pricing, and the removal of EV incentives in the U.S. contributed to the company's poor performance [4] Cash Flow and Future Outlook - A positive aspect was the increase in cash flow from operating and investment activities, which rose 118% from 1.1 billion kronor in 2024 to 2.4 billion kronor in 2025 [5] - The company anticipates negative cash effects in the first half of 2026 due to costs associated with the production start of the new electric EX60 and inventory buildup for XC90 and XC60 models [5]

Bretton Woods System Overview - The Bretton Woods system aimed to establish a stable international monetary system to foster global trade and economic stability after World War II [6] - The system placed the US at the center of the economic universe, with the US dollar pegged to gold at $35 per troy ounce, and other countries pegged their currencies to the dollar [21][22] - The International Monetary Fund (IMF) and the World Bank were created to oversee the system, promote economic development, and ensure adherence to the fixed parity system [25] Systemic Flaws and Challenges - The system's reliance on a national currency (the US dollar) as the primary source of international liquidity contained an inherent contradiction, known as the Triffin dilemma [32] - The US's persistent balance of payments deficits led to a flood of dollars, eroding confidence in the dollar's convertibility into gold [36] - The US did not actively manage its exchange rate, placing the burden of adjustment on other countries and creating an "exorbitant privilege" for the US [28][31] Demise of Bretton Woods - Countries began swapping dollars for gold, leading to a depletion of US gold reserves [41][42] - On August 15, 1971, President Nixon ended the convertibility of dollars into gold, effectively ending the Bretton Woods system [44] - The end of Bretton Woods led to a system of free-floating exchange rates and a terminal decline in the value of many currencies [47] Legacy and Implications - Bretton Woods institutionalized the dollar's global role as the dominant reserve currency [21] - The system's flaws led to the erosion of the US domestic manufacturing base and a growing net international investment position deficit [39] - The end of Bretton Woods marked the birth of fiat currency, backed by nothing but the issuer's monopoly on violence [46]