148 Money am the one side and he threat of inflation on the other. Tis threat of inition (price Fises) was in turn further magnified by the long-term downward trajectory of the sister the diminishing value ofthe national currency effectively making all the foreign goods imported by Americans more expensive, And imported inflation uide even the Feds traditional ability to manipulate interes! res supposedly ae ire short-term government bonds (by either buying back the bonds to reduce reason selling them to raise rates) look set in 2010 and 2011 to Become increasingly rmijcketed by global market speculation over the heightened risk attached to US sovereign debt. In short, the United States, thas begun to experience global money move fave experienced them for much longer: namely as consta\in and controlling ae erect enabling The ability of the US government and US Federal Resets © taanercne in the markets remains significant, but their oom for mancivet gradu ally geting smaller as the markets themselves begin to treat US debt as something less an worthy than the “risk-free” benchmark it represented for over half century. It cree no surprise therefore to see the Vix market volatility index sing early 2010 despite the US stock-market recovery that marked the start ‘of the year. The surface tnayhave looked calm, and the FT report may only have registered the cause of some polity in its esoteric acknowledgment of an unusual interest Fe SE or the swaps market. However, underneath these derivative sighs Of the surface, ‘ean pulls in global money were creating all sorts of deeper disturbances in the cee of dollar dominance fist established at Bretton Woods. 2011+ other signs ible emerged when the credit ratings frm Standard and Poors downgraded the ‘United States, thereby suggesting increasing risks a8s0- dg that had always been seen since Bretton Woods 2s 3 cane er chmark of sk-ftee investment. To understand the epoch significance of these global disturbances, we now need to travel back to the time and town in New Hampshire where global dolar dominance was frst put in place. which once benefited so much from dollar dominance, ‘ments in the same way as other countries sovereign credit rating of the Gated with US Treasury bon 5.2 From Bretton Woods to the Rise of Global Finance “The accelerated movement of money around our world and the 24/7 c3sete offinan- ial speculation it enables have not always existed in the current form of instantane cit rency trading. Money has never moved before with the elecwone speed ot the geographic scope with which it moves today. Indeed f hore is an example of@ slobal development in which te three big myths ab make some sense, itis financial marketplace, the immense power of ts movements over | government anhalt revisioning ofthe world by financial investorslooking ony at theb Tre would all seem to illustrate global forces that ae in some notable respects sve, and leveling. However, ven with global finance, the connection of ‘out Globalization would seem? rhc ae oval fiance. The novelty of todays elect poli Globalizatio global fina more compl to address tt and thus als rounds of emment. TE designed to therefore fi Officially Breton Wox silbatling sillosingla Farfromall repesentatt Nev Hampe nentafer the violence concer it atthetime, Allof us depressio land, dest internaic wasted w Wesawbinflation (price rajectory of the ‘making all the ported inflation son supposedly bonds to reduce ome increasingly Keattached to US lollar dominance, as other countries ig and controlling rederal Reserve t0 ranewver is gradu- tassomething less half a century: It ising in early 2010 e year, The surface J the cause of some crest rate inversion gus on the surface, disturbances in the In 2011, other signs ars downgraded the aereasing risks a8s- Bretton Woods 28a chal significance of ae and town in New 2 Rise 2124/7 casino of finan at form of instantane ae electronic speed oF cere is an example of lization would seem 1° yy of today’s electronic ver government polis ding only atthe bottom | e notable réspects ne the connection Money 149 lobslization myths to reality remains tenuous. While the immense power of todays global financial system should never be doubted, the story ofitsrise indicates a much vove complex reality: a reality rooted partyin a histori atempt by policy-makers to address the crises associated with the speculative financial flows of an earlier cra, ee joa realy shaped as much bya governmental tempt to control earer i rounds of financial volatility as by some radically new financial influence over | rent. The name of this historic attempt at governmental control was the Bretton ‘od agreement, and because it was an effort at global financial governance that ‘was chiefly organized by the United States, it also created an institutional legacy ed to protect specifically American interests, a legacy that was and remains He ie tom leveling fs implications for global nancial ows Officially knowa as the Oviffed Nafions Monetary-and_Einancial Conjerence, the Bretton Woods meeting took pace in July 1944 while British and American troops were sil bathing thie way against the Nazis through France and while the Soviet Army was silllosing large numbers ofits soldiers fighting ts way towards Germany from the east Ferfromall the death and destruction, ministers ofthe US, Britain, and France met with representatives of 41 other Allied countries, including the Soviet Union in the small ‘New Hampshire town of Bretton Woods to develop a plan for world economic develop ment after the expected defeat ofthe Japanese'and German regimes. While distant from devolence of te war itself the meeting was nonetheless overshadowed by a deep concern with how the global financial crises ofthe 1980s had crated the opportunity fascism o develop in the ist place: Henry Morgenthau, the US Treasury Secretary atihe ume, captured tis concern concisely in his own addres to the conference All of us have seen the great economic tragedy of our time. We saw the world-wide depression of the 1930s, We saw currency disorders develop and spread from land to land, destroying the bass fr international trade and international investment and even | international faith. In their wake we saw unemployment and wretchediness~ idle tools, ‘wasted wealth. We saw their victims fll prey, in places to demagogues and dictators. | We aw bewilderment and biteress become breedeT Of sts and, Halo wair® E ‘Thus it was with a view to preventing more global depression, unemployment, fascism, and wat that the organizers and attendees came together at the Mount Washington Hotel in Bretton Woods to plan for what was hoped would be a more ble post-war financial order (Figure 51) “The agreement that the US representatives secured at the conference had four Bijor outcomes, three of them institutional, and one of them more organizational cure. The first institutional outcome was the creation of Whe International fonetary Fund (IMI, which vas planned witha view-o providinga solution tothe Grt-term balance of payments crises that, along withall sorts ofrelated competitive icy devaluations, had been such a disruptive feature of economic depression Biting the 1930s. The second institutional outcome was the creation of the World Wkzwhose original name at Bretton Woods was the Internation E disiriction and Development (IBRD). The purpose of this bank was conceived150 Money | | Figure 5.2 ofthe USSR an Source: US Nat Figure 5.1 Mecting of 44 countries at Bretton Woods in 1944. owes: US National Archives (NARA): 208-N-29536. primarily in terms of redeveloping he economics xavaged by hes Only later did commitment jopment mandate that it has now as the World f fttakeon the much more global deve setae ill amore limited atthe time, the third jnstittional outcome of Bretton panne was a plan to create an international tride organization that would werk towards expanding enforcing ice ad a iba ee IDwas thi plan ot Jed thonugh te many decades of talks over a Gener Agreement on Tai and Yee GATE) to the eventual establishment of the World Trade Organization (WTO) ip 1995, Much moze immediate in tsimpact, bt just as long lasting ns influence as (PSSince Bretton Woods institutions, the fourth major outcome ofthe conference tras to formalize dollar-based organizational structure forthe global money “pel By 1944, the Unted Sales owned three-quarters of he exiting monet gid in the word This, combined with the underying fact thatthe US economy vi arerging from the war in much better shape than the Buropean and Asan 60 nies meant that the US dollar looked set to remain “as good as gold” a ‘ryt, After she Wall iret crash 01929, the dollar had been pesged” 68 ‘Ge rate of $35 per ounce. It was therefore with an assumption that this pez would remain sabe into the future that she participant # Bretton ceeded to envision a global system of cur ancy controls in which foreign currendig ee only be allowed to flucaate within a narzow band around agreed par vAg-A-¥is the dollar/gold standard: Tm turn the pu salitutions and, most particuladly, the primary purpose of the [MP. was ent ig a the conference as one of facilitating and. stebilizing. this dolls. sant tary regtme Overall, therefore, the framework forthe global economic aaarnas constructed at Bretton Woods was characterized by th