Monetary Planners as the Masters of Denial
by Murray N. Rothbard
At the end of World War II an all-powerful United States succeeded in imposing on the Western world its major economic war aim: the Bretton Woods international monetary system, establishing fixed exchange rates and the dollar as the base of world currencies. That system was thought to be engraved in stone; yet by the end of the 1960s Bretton Woods lay in ruins.
But this was only one part of the monetary history of this century. Since World War I the leading nations have been stumbling and bumbling in their approach to international monetary affairs. The world has been pulled in and out of fixed exchange rates, various degrees of fluctuating exchange rates, international collaboration, harsh “beggar thy neighbor” monetary and economic warfare, various forms of partial reliance on gold, and different kinds of pound, dollar, and “paper-gold” standards.
During this same period, the world has suffered from myriad monetary crises; runs on gold, the pound, and the dollar; and jerry-built agreements that are supposedly eternal but that collapse in a few months. (The Smithsonian Agreement of December 1971, which President Nixon hailed as “the greatest monetary agreement of all time,” collapsed within a year and a half.)