What America Needs If He’s Serious

In off-the-cuff remarks at a recent meeting of the Business Roundtable, President Biden said, “There’s going to be a new world order out there, and we’ve got to lead it.”

This episode of What’s Ahead argues that if the President is serious about the U.S. leading positively for a better world order, there’s one crucial area in which we’ve been negligent and need to make a course correction: international monetary policy.

Sounds boring, but the 1930s demonstrated what happens when we get this wrong.

We got it right after WWII, with the creation of the Bretton Woods monetary system, whereby the dollar’s value was fixed to gold and the value of other currencies were tied to the dollar at a fixed rate. Bretton Woods was a critical reason that the U.S., Western Europe and Japan experienced incredible economic booms even after prewar levels of production were exceeded.

For fallacious reasons we destroyed Bretton Woods in the early 1970s. Since then, our historic average rates of economic growth have fallen by more than one-third. The performances of other developed countries have suffered as well.

We and the world would benefit enormously from a new Bretton Woods-type monetary system.