November 14, 2008
PJB: Bretton Woods II — No Way
By Patrick J. Buchanan
“Laissez-faire is finished, the all-powerful market that is always right, that’s finished,” said Nicholas Sarkozy, speaking ex cathedra, last month.
As a result, said the diminutive French president, it is “necessary to rebuild the entire global financial and monetary system from the bottom up, the way it was done at Bretton Woods after World War II.”
Sarky’s history is a bit off. The Bretton Woods Agreements were actually signed in July 1944, when German troops still occupied Paris, a month before France was liberated by the Americans, who let Charles de Gaulle and the Free French do the honors.
Our European friends seem positively giddy about this weekend’s meeting in Washington, where they hope to impose upon us a new world economic order like the one we imposed in 1944.
We “must have a new Bretton Woods — building a new financial architecture for the years ahead,” says Gordon Brown, who is surely aware the first Bretton Woods was a British humiliation, with London yielding place and submitting to Washington’s dictation.
Brown and Sarky will be here for what is being bailed as a historic gathering of the G-20, which consists of the G-7 — the United States, Canada, Britain, France, Germany, Italy and Japan — plus the BRIC four, the rising economic powers of Brazil, Russia, India and China, and other nine economic powers, like Saudi Arabia, South Korea and Mexico.
Yet, to call this a second Bretton Woods is absurd. At that Mount Washington Hotel gathering in New Hampshire, the United States, led by Treasury’s Harry Dexter White, who doubled as a Soviet spy, dictated the terms under which the world economy was to operate.
The U.S. dollar, tied to gold, was to become the world’s reserve currency. The pound, the franc and other currencies were to be tied to the dollar at fixed rates of exchange. An International Monetary Fund was established to lend to nations with balance of payments problems. An International Bank for Reconstruction and Development (World Bank) was created to provide loans for rebuilding war-torn Europe.
America provided most of the financing for the new institutions and assumed the lion’s share of control. Though the most famous economist of the age, J.M. Keynes, led the British delegation, his ideas — for a new world central bank and new world currency — were brushed aside by Harry White and the Americans.
The Bretton Woods system endured until Richard Nixon. With his country hemorrhaging gold in 1971, Nixon slammed the gold window shut, cut the dollar loose and let it float against other currencies. Nixon’s was an act of necessity. The Europeans, with more dollars than they needed or wanted, were coming to cash them in and clean out Fort Knox.
To suggest that Europeans possess anything like the hegemonic power of America in 1944 is delusion.
As Gideon Rachman writes in the Financial Times, Bretton Woods II holds promise of being a flop. Even in America’s financial crisis, no one can dictate to the United States. Nor will rising nations like China, jealous of their sovereignty, accept proctorship from an effete and aging Europe.
Brown wants the IMF to become the “global central bank,” the Fed of the world economy. No way, Brownie. Americans are not going to fund such a bank, nor cede it authority, nor abide by its dictates. We are not yet a Third World nation dependent on the IMF.
Globalists see in this worst of world financial crises since the 1930s what New Dealers saw in the Depression: an opportunity to geometrically augment government power and impose their visions upon mankind.
Barack Obama’s chief of staff appears to entertain such thoughts. Said Rahm Emanuel Sunday, “The crisis we have today is an opportunity to finally deal with what Washington, for years, has kicked down the road.”
Brown and Sarkozy may believe a new era of multilateralism is upon us, in which they will play great roles, as the bad old Bush era of American unilateralism ends. But should Obama begin to cede U.S. sovereignty, he will find himself in the same firestorm that engulfed George Bush and John McCain when they sought amnesty for 12 million to 20 million illegal aliens.
The Europeans are dreaming. It is nationalism, not globalism or multilateralism, that is resurgent worldwide. Recall: China, India and the United States rejected the Kyoto Protocols on global warming. And even if Obama agrees to global climate change demands, Beijing will not.
And while China, India and Brazil may make even more demands, the United States is making no more concessions to conclude the Doha round of world trade negotiations. Doha is dead. Big Labor, which backed Obama, wants no more trade deals at the expense of U.S. workers.
Russia, too, is ready to use its veto in the Security Council to protect its perceived great power interests.
American unipolarity, which all professed to abhor, is indeed at an end.
Let us see how the world likes the new multipolarity, with two, three, many centers of power — economic, political and military.
This looks less like 1944 than 1904, with the Brits in decline and half a dozen other great powers rising.
Tags: Barack Obama, Economy, Globalism, IMF, Sovereignty, Trade, World Bank
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Oh man Pat, I’m with you on so many things, but the Great Jude Wanniski would roll over in his grave if he read this piece. What Nixon did in ‘71 was the biggest economic mistake in our Country’s history, just as Iraq War II was its greatest FP mistake. Floating Currency is the worst economic mistake next to Communism. You have your history wrong. Nixon closed the London gold window in 71. There was no gold window in the US anymore. We had a De Facto Gold standard because we allowed a London Gold window to remain open. It is impossible to have an economy without a standardized unit of account. Just like its impossible to play golf or any other game with out a standard unit of account. To do otherwise is not to invite but to BEG for corruption. The Establishment can manipulate the value of our currency at will, to their advantage, and to the detriment of the working class. All of these Financial Crises are because of this. Its like a building without an foundation.
And besides do you know how many trillions are tied up in the currency futures markets, money that could be invested in something productive that would create jobs and a higher standard of living for all?
Just because you freely trade with another country doesn’t mean you give up your sovereignty to them. A trade imbalance with China? Of course! Our economy is 12x theirs in size. How do we expect them to buy as much as we buy from them? That is absurd to expect.
If it hadn’t been for Reagan in 79 America’s economy would have imploded. But now we are in the same situation and we have no Reagan. We have an Anti-Reagan, something that scares me very much during these times.
Globalism is the stuff of a one world fascist government. A one world economic system can only end in the lowering of most of the world’s population living standards, while about 2 percent of the controllers will control the other 98 percent of the world’s wealth.
Each sovereign nation should maintain economic and monetary sovereignty. Differences in currency values can be calculated when trade between sovereigns occurs.
Greed and covetousness are the motivation for globalism. Needless to say, these things are not virtues.
You’re the best Pat, don’t let the Ron Paul gold-standard nutters tell you any different.
Yeah, we are such nutters. Boy, I’m glad Nixon did that in ‘71. Don’t you just miss those great economic times of the 70s?
We don’t want a Gold Standard. We want a stable unit of account. Gold just happens to be the most stable unit of value on the planet for various reasons. We don’t even actually have to hold the stuff. We just need to mandate that the Federal reserve keep the Gold price in the open market stable, within a tight range, by printing dollars when the price of it goes too far down (a signal that the economy is needing liquidity), and by selling bonds when the price goes too far up (soaking up excess liquidity that leads to inflation)
A “de facto” gold standard would end all inflations and de flations, and end financial bubbles that lead to the crisis such as we are in. It would increase productivity, prosperity, and the standard of living for everyone.
It would be easy to salvage our economic and monetary situation if the government took the simple step of treating credit as what it really is: a public utility like clean air, water, or electricity; and not the private property of the banking system.
Congress could authorize direct expenditure of government funds for legitimate public expenses, as was done with the Civil War “Greenbacks.” These “Greenbacks” were not inflationary because they were backed by tangible economic production of goods and services. It is the debt based currency, introduced in 1913, that has caused the dollar to lose 95 percent of its value. This type of currency creation is contained in the proposed American Monetary Act.
Another idea that would work is to have Congress authorize dividend payments to citizens as advocated by the “Social Credit” movement founded by C.H. Douglas of Great Britain, as a means of monetizing the net appreciation of the producing economy. Dividends could be issued from a national dividend account without recourse to taxation or borrowing. This concept is related to the Alaska Permanent Fund, and to the concept of a basic income guarantee.
You can Google “American Monetary Act” or “Social Credit” to get more details about how these systems work.
“To suggest that Europeans possess anything like the hegemonic power of America in 1944 is delusion.”
I’d call it not a delusion, but an illusion Europe is trying to pass off on us. We’re supposed to be so concerned about how Europe sees America. Do they care how we see them? Not one but two ‘Hundred Year’ wars, not two but three world wars, Hitler, Stalin, communism, fascism. I’m not taking any lectures from Europe.
When we had hegemony, we could worry about world opinion — out of ‘noblesse oblige.’ If we’re no longer a superpower, why should we care what Europe thinks of us? Personally, I think Putin is doing wonders for Russia’s world image.
Pat is right. Soon enough, Americans will see our economic problems as a loss of national power, rather than the result of policy blunders. We’re not falling for Sarkozy’s one-way internationalism hustle.
Not only is gold an archaic basis upon which to base money (the value of money is dependent upon the amount of goods and services it can command, not its composition), but the return to a gold standard again leave a body gives the banking community tremendous power over individuals.
I think these “gold bugs” actually think that people are going to go around exchanging bits of gold, and they fail to recognize the fact that the majority of money will still be “bank credit” created by banks through loans to individuals and businesses.
Further, the idea that there never was inflation or recessions under a gold standard is a complete lie.
Inflation did not exist before 1971. Socred, show me one example of inflation or deflation before then. I did not say recession. I said inflation or deflation. And by that I mean the whole swath of commodities going up or down in price, not one particular item like Tulips that had a sound reason for doing so.
A De Facto Gold standard has nothing to do with using the metal as currency. We don’t even have to hold the stuff. Just make it mandated that the open market of price of gold in relation to the dollar remains steady withing a tight range. The Fed can do that easily. It doesn’t because the Establishment knows how to take advantage of the chaotic wild swings in our fundamental unit of account: the dollar, to make money for themselves at the expense of wreaking havoc in our economy and on the lives of average individuals, the ones who do the real work, take the real risks, in exchange for a piece of paper, whose value can be manipulated by a printing press.
I’m with you GEO, Greed is now the Apple in the modern Garden of Eden that is now setting the stage for the Antichrist’s One World Government. It’s prophecy being fulfilled. Greed is indeed the motivator of the Satanic Globalists.