Our system, from Bretton Woods to the Crash of 2008
ABSTRACT: This is the first of a two-part study of a fundamental but neglected truth concerning the nature of money. The central aspect of the study is the description of time-dated money. The latter is tackled in Part II. Part I features, instead, an exposé of the dysfunctional setting that “forced” the birth of the idea of time-dated certificates. I.e., the international monetary system. Perishable money is thus a creature of crisis. For this reason, we propose herein a succinct narrative of the West’s economic and financial vicissitudes from 1944 to 2008. That is, from the establishment of our modern financial System at Bretton Woods to the Lehman Brothers Crash of 2008. In sum, the thesis argues that all the cyclical adventures of that period have been ultimately driven by America’s hegemonic interests.
Since the 1980s, the mechanism has functioned as follows. In order to bind the vassal economies of the world, the financial capital of the empire, New York, is deputized to attract their savings to its money markets. Thus, foreigners are invited to purchase US securities (they ” invest”). The USA, in turn, employs such capital flows to cover the cost, inter alia, of military expenditures and exports. Thus swamped with dollars, foreigners find themselves forced to “re-invest” (or better, “park”) the dollar proceeds obtained from their export sales to the United States in T-bills. The pattern is contradistinguished by a cyclical patter, which entails a standard boom-and-bust dynamic.
This is the first sketch of a model of international political economy, whose thesis and exposition were entirely reformulated eight years later in “The Political Economy of Hyper-Modernity.”
In Anarchist Studies, Vol. 17 n.1 (2009): 18-47