Was the Bretton Woods System successful?

Success must be a relative term. The performance of the Bretton Woods system here is based on the contribution to the "function in economic transformation" after World War II and "trade growth" during that period. The role of economic transformation after World War II Bretton Woods is a model of the fundamental role of power in international organization design and development. One of the main architects of Bretton Woods is America. Its advantage in negotiating a wartime conference shows the importance of hegemon leaders in the early stages of any new international system.

Following the Bretton Woods Agreement in 1944, the currency management of the Bretton Woods System enacted regulations for commerce and financial relations between the United States, Canada, Western Europe, Australia, and Japan. The Bretton Woods scheme is the first example of a fully agreed monetary policy designed to manage monetary relations between independent countries. The main feature of the Bretton Woods system is the obligation to adopt monetary policy to keep foreign exchange rate within 1% by linking the currency to money and filling the imbalance between temporary payment of the IMF is. Furthermore, it is necessary to tackle the lack of cooperation among other countries and prevention of devaluation due to currency competition.

The Bretton Woods currency system is opposite in many ways from the prewar system. The prewar system was almost a coincidence; the Bretton Woods system was carefully negotiated and developed by policy makers and experts (the same name at the Bretton Woods conference in New Hampshire in 1944). The prewar system addressed the "impossible trinity" by sacrificing monetary policy to achieve international goals; the Bretton Woods system limits international capital flows by implementing control measures To do. Under the Bretton Woods regime, gold-supported dollar became the world's reserve currency, reflecting the status of the United States as the world's leading country after the Second World War.

The main reason why the Bretton Woods system collapsed is that the inflation monetary policy is not suitable for the major currency countries of the system. The Bretton Woods system is based on rules, the most important of which is to follow financial and fiscal policies consistent with civil servants. The United States violated this rule after 1965. This has become a privilege seemingly aspiring to the US to abandon. Overrated currencies and sustained trade deficit are good for American consumers, but it is painful for producers. The accumulation of reserves over the past 20 years is closely related to the surge in the US current account deficit. Imports are growing more rapidly than exports and the number of new jobs in export industries is insufficient to absorb workers driven to intensifying foreign competition. Tariffs can not solve this problem. The gap of the current account is a product of the basic financial flow and the import tax raises the dollar only in a destructive way only.