40th Anniversary of the end of Bretton Woods

Kevin P. Gallagher

Forty years ago today the United States ended the Bretton Woods International Monetary System.  This video shows then US President Richard Nixon making the announcement to the world:

No longer were fixed exchange rates the norm for the global economy.  Floating rates prevailed, and it was hoped that financial and currency markets would become more stable.  That has not been the case.  As we move into the fourth year of the global financial crisis a number of scholars and policy-makers have called for a new international monetary system.  Some call for a new global reserve system based on Special Drawing Rights, others call for a global GDP-linked bond, and others such as Ron Paul and Robert Zoellick long for those days of the gold standard.

What are your thoughts on this 40th anniversary of such a transformative event?  Where do we go now?

2 Responses to “40th Anniversary of the end of Bretton Woods”

  1. What is required is a 21 century version of the “Keynes Plan” that was presented by Keynes at Bretton Woods and vetoed by the US delegation led by Harry Dexter White.

    In my book THE KEYNES SOLUTION;THE PATH TO GLOBAL ECONOMIC PROSPERITY [Palgrave/Macmillan, 2009] a 21st century version of this Keynes Plan, my IMCU plan, is presentred and discussed in detail. Such a plan would prevent (1) outsourcing causing loss of jobs in the domestic economy,(2) international financial crisis contagion that occurred in the global financial collapse of 2008, (3), large imbalancesx in all nations’s balance of payments, etc. The Plan is to extensive to discuss in a small blog commentatry here. Read my book.

    Paul Davidson.

    Paul Davidson

  2. Jean Maier says:

    In my graduate research in economics, finance and environmental studies, I advocated for a currency sustainability standard to stabilize not only global finance but global environmental crises. Although we are currently fixated on financial stability following a severe crisis that we could no longer ignore, there are multiple global environmental crises that are far more dangerous. At some point, they too will be unavoidable and we will be required to address them for better or for worse.

    Keynes’s plan is admirable too. I have also been impressed with Joseph Stiglitz’s global reserve model where he argues for “global greenback” reserves in his book “Making Globalization Work”. Countries with excess reserves could exchange them for the global reserves with the IMF. These IMF funds could be used to address global problems. And the model could also ease global imbalances between countries. Unfortunately Stiglitz’s ideas have not gone very far in the last 10 years. But then, neither did Keynes’s proposition.