bretton woods

China in Their Own Words

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If the yuan isn’t stable, it will bring disaster to China and the world. If we increase the yuan by 20 percent-40 percent as some people are calling for, many of our factories will shut down and society will be in turmoil. If China’s economy goes down, it’s not good for the world economy.

This is China Premier Wen Jiabao, as quoted by Bloomberg News.

Get that? The United States should continue to export jobs to China as some sort of global social program. We should continue to give the Chinese people our jobs so they won't raise hell and revolt. We should allow China to continue to manipulate it's currency, capturing global manufacturing capabilities to keep the Chinese government in power. Wow. Maybe we should import Chinese potential social unrest, for the United States policies are stiffing the U.S. worker and the cries from the Populist are a muted whimper.

Jiabao also chastised the EU for joining the United States in demanding China re-evaluate their currency and blamed the United States for currency fluctuations. Businessweek:

Europe shouldn’t join the choir to press China to allow more yuan appreciation. The euro had a big fluctuation recently. It’s not because of yuan but the dollars. We shouldn’t be blamed for it; if there’s someone to be questioned, it should be the U.S.

Junk Economics and the middle class: Where we went wrong

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I'm not so arrogant as to believe that I know the perfect solution to our economic problems. Anyone that tells you they know is either a fool or a liar.

However, that doesn't mean we can't discover where we went wrong once you apply a little logic and data to the situation.
For instance, if you realize you have taken a wrong turn, it makes more sense to turn around and go back to the corner where the mistake was made, than it does to drive in a general direction and hope you can find your way home.

When it comes to the economy, its pretty easy to discover when the wrong turn was made - 1972.

The End of Bretton Woods II

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The world of economics is every moving, ever changing. What was true 65 years ago, or even 38 years ago, is no longer true today. The world has moved on.

The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states in the mid 20th century.
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The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold and the ability of the IMF to bridge temporary imbalances of payments.

The Bretton Woods system was created during the final days of WWII and we still live with its legacy today. However, it has morphed into something very different since then.