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How Judy Shelton’s call for a new Bretton Woods duped pro-worker conservatives https://americancompass.org/the-commons/how-judy-sheltons-call-for-a-new-bretton-woods-duped-pro-worker-conservatives/
Judy Shelton’s nomination to the Federal Reserve board was narrowly blocked on a 50-47 vote last week -- shockingly close for a person so antithetical to everything Trump purports to stand for.
What gives?
What gives?
Most were eager to give Trump a win.
Populist conservatives like @HawleyMO & @marcorubio, OTOH, seemed to think Shelton's goldbuggery was unfairly maligned.
A new Bretton Woods, the theory goes, would reduce financialization & correct global imbalances. https://www.cato.org/cato-journal/springsummer-2018/case-new-international-monetary-system
Populist conservatives like @HawleyMO & @marcorubio, OTOH, seemed to think Shelton's goldbuggery was unfairly maligned.
A new Bretton Woods, the theory goes, would reduce financialization & correct global imbalances. https://www.cato.org/cato-journal/springsummer-2018/case-new-international-monetary-system
According to Shelton, a new Bretton Woods-style monetary system (meaning: globally coordinated fixed exchange rates pegged to gold) would "restore fiscal discipline" while ending the use of monetary easing as a beggar-thy-neighbor growth strategy.
Let's unpack this...
Let's unpack this...
The “impossible trinity” or trilemma of international economics states that a country can never have a fixed foreign exchange rate, free movement of capital, and an independent monetary policy all at the same time.
Their interdependencies mean a country must pick two, any two.
Their interdependencies mean a country must pick two, any two.
After Bretton Woods collapsed, advanced countries opted for independent monetary policy & free capital movement.
In theory balance of payment issues resolve themselves through the equilibrating force of floating exchange rates, rather than needing continuous top-down management.
In theory balance of payment issues resolve themselves through the equilibrating force of floating exchange rates, rather than needing continuous top-down management.
The theory is right, until you have bad actors like China that exploit our relatively laissez-faire int'l monetary system through strategic depreciation and capital controls.
Now imagine if China had to use a gold-backed global currency. Would American manufacturing be saved?
Now imagine if China had to use a gold-backed global currency. Would American manufacturing be saved?
Not really. While China undervalued the Yuan in the early 2000s, since 2005 its been allowed to appreciate.
The real source of global imbalance today, as @M_C_Klein & @michaelxpettis argue, lies *within* China—internal policies that repress wages & artificially boost savings.
The real source of global imbalance today, as @M_C_Klein & @michaelxpettis argue, lies *within* China—internal policies that repress wages & artificially boost savings.
