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Why would restoring Bretton Woods be disastrous? The late 40s through the late 60s were among the biggest economic boom years in world history and perhaps the g

Why would restoring Bretton Woods be disastrous? The late 40s through the late 60s were among the biggest economic boom years in world history and perhaps the greatest expansion of wealth and quality of living in human history.

sudosysgen 6y ago
The late 40s through the late 60s were amazing economic booms because of a small event called World War 2. It was removed because it gave very little flexibility in monetary policy, and gravely prevented deficit spending. This led to failure to control the business cycle, as well as inflation in general, which would have been disastrous. If we restored Bretton Woods, 2008 would have been a complete disaster, and the current recession would be orders of magnitude worse and would last much longer. As for why control over inflation and deficit spending is helpful in recession, read Krugman, or Keynes if you like the classics.
- chrisco255 6y ago
  That's not strictly true. The suburbs were rolled out, interstate highway travel became widespread, commercial air travel took off, computing was just beginning, television started to proliferate, retail expanded, air conditioning became widespread...there were numerous technological expansions and improvements in quality of life. Sound money ensured that money was invested in things that actually produced productivity improvements. We coasted on the residual returns of investments from earlier eras, but productive investment, I would argue, has declined since those earlier decades. ROIs on loaned money have declined in the zero interest rate era.
kerkeslager 6y ago
The 40s through the late 60s were also the era of the Holocaust, the Indonesian Genocide, and the Serbian Genocide. Did Bretton Woods cause those too? Or can we agree that maybe a lot of things that happened during the 40s through 60s weren't caused by Bretton Woods?
- chrisco255 6y ago
  I said late 40s. Obviously there is a strong connection between monetary policy and economic expansion and a weak connection between monetary policy and genocide.

sudosysgen 6y ago

The late 40s through the late 60s were amazing economic booms because of a small event called World War 2. It was removed because it gave very little flexibility in monetary policy, and gravely prevented deficit spending. This led to failure to control the business cycle, as well as inflation in general, which would have been disastrous. If we restored Bretton Woods, 2008 would have been a complete disaster, and the current recession would be orders of magnitude worse and would last much longer. As for why control over inflation and deficit spending is helpful in recession, read Krugman, or Keynes if you like the classics.

chrisco255 6y ago
That's not strictly true. The suburbs were rolled out, interstate highway travel became widespread, commercial air travel took off, computing was just beginning, television started to proliferate, retail expanded, air conditioning became widespread...there were numerous technological expansions and improvements in quality of life. Sound money ensured that money was invested in things that actually produced productivity improvements. We coasted on the residual returns of investments from earlier eras, but productive investment, I would argue, has declined since those earlier decades. ROIs on loaned money have declined in the zero interest rate era.

kerkeslager 6y ago

The 40s through the late 60s were also the era of the Holocaust, the Indonesian Genocide, and the Serbian Genocide. Did Bretton Woods cause those too? Or can we agree that maybe a lot of things that happened during the 40s through 60s weren't caused by Bretton Woods?

chrisco255 6y ago
I said late 40s. Obviously there is a strong connection between monetary policy and economic expansion and a weak connection between monetary policy and genocide.