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To: denekin who wrote (19455)	9/21/1998 6:10:00 PM
From: Alex	Respond to of 116759

Hi Lawrence. Thanks for the kind words. I am probably the last person here to answer your question. Ole 49r is very knowledgeable re: Bretton Woods I believe, and could give you a far better reply than I. I have no new articles at present that speculate on what a new Bretton Woods would look like, but I've long felt that the scenario that would be played out is similar to Bill M.'s reply to me today.................... Message 5800295 I don't expect to have very much time to search in the next few days, but I will do my best to try and find something that relates to your question asap. Regards.

To: denekin who wrote (19455)	9/22/1998 3:02:00 AM
From: Alex	Read Replies (2) \| Respond to of 116759

Where Are the Thinkers Who'll Build a Better Money Machine? ------------------------------------------------------------------------ By William Pfaff Los Angeles Times Syndicate, International Herald Tribune ------------------------------------------------------------------------ LONDON - The world unquestionably is in need of a new way to manage the international economy, but it will have a hard time finding it because the intellectual foundation for a ''new Bretton Woods'' is lacking. At the end of the second world war, when all of the war economies had been strictly controlled, planned and directed to maximize war production, people feared that a return to production for peacetime demand could produce a crisis of ''overproduction,'' followed by slump, economic nationalism and trade protectionism, and a return to the depression of the prewar years. The meetings at Bretton Woods, in New Hampshire, were successful because a new interpretation of the international economy existed, developed by John Maynard Keynes during the 1930s, validated by the wartime experience of economic management. This new interpretation was accepted by the majority of economists and officials. Bretton Woods established a structure for postwar stability and growth in which member governments declared fixed currency exchange rates related to the dollar (then exchangeable into gold), to be altered only in the event of ''fundamental disequilibrium.'' This was to prevent competitive devaluations. The IMF was set up to give credits to governments in difficulty, so as to reduce or eliminate the need to devalue currencies. The Bretton Woods system of currency stability was destroyed in 1971 by the Nixon administration's suspension of the dollar's gold convertibility, its subsequent devaluation, and the general move to floating exchange rates. On Monday, President Bill Clinton fled Washington for refuge in the Council on Foreign Relations' paneled library on Park Avenue. He told the Council's members that the World Bank and IMF annual meetings scheduled for early next month should be turned into a 22-nation conference on reforming the financial system. The problems he identified include the new contagiousness of crises and the explosive volatility of currency and equity markets, as well as the dangerous social and political consequences of the Asian and Russian collapses. But there was nothing new in Mr. Clinton's approach. He asked for debt resolution in Asia, more World Bank money addressed to the social dimension of the crisis, still more pressure on Japan to reflate, and so forth. His talk was a characteristic product of the thinking of the so-called ''Washington consensus'' on economic policy. No doubt was expressed about the prevailing Washington appreciation of the fundamental nature of today's problems. Little such doubt seems to exist in the mainstream economic community. Worse, there is little sign of a new analysis able to provide a theoretical basis upon which real reform of the international economy might be constructed. There is no new Keynes. Without a new Keynes, it is hard to see what Mr. Clinton's conference, or any other reform effort, can do, other than to patch up the system. The world's plight results from the collapse of the two governing paradigms of international society. The economy has been governed by the essentially monetarist consensus, which said that sweeping international deregulation and the opening of markets worldwide to foreign investment and free trade would produce unprecedented prosperity for all. This consensus continues to recommend deflationary measures to a system in danger of toppling into mass bankruptcies and unemployment. The Asian and Russian crises have demonstrated that globalizing the world economy globalized its susceptibility to crisis, at the same time creating conditions that block the crisis's resolution. Thus what originally was a little problem with the Thai baht has brought down the Asian tigers, Russia, is now attacking Latin America, and has the United States and Europe anxious. The political paradigm has been that of America the sole superpower, overseeing the universalization of market economies and liberal democracy. That too bears embarrassingly small resemblance to what actually is going on. A number of proposals are on the table for controlling the present velocity and irresponsibility of capital movements, and for recreating some degree of control over exchange rates, perhaps through managing the relationships between dollar, euro, and an as-yet to be created Asian regional currency bloc. But the fundamental need is acknowledgment that maximizing business efficiencies and capital return while ignoring the social and resource-use disutilities thereby produced is simply wrong - wrong not only in theory but in practical outcome. That would not be new thinking, merely a return to what was the common wisdom of a half-century ago. ------------------------------------------------------------------------ <Picture>ÿ