Lately, I've heard so many times that the Bretton Woods monetary system was canceled on August 15, 1971, after the US defaulted by refusing to exchange dollars for gold, which became boring. But since everywhere and everywhere I speak specifically about the Bretton Woods financial model, the time has come to explain this situation in more or less detail.
So, in 1913, the United States passed a law on the "Federal Reserve", which ensured control over emission and money circulation on the part of individuals (beneficiaries of the banking system). It is this moment that can be called the point of the final formation of the "Western" global project, which at that moment was still in the network stage.
By the way, I will immediately answer various critics that the Fed is supposedly a state structure, since its head is appointed by the US President (with the consent of the Congress). In reality, the Fed's board of governors consists not only of presidential-appointed members (of which there seem to be 4 or 5), but also of the rotating chairmen of reserve banks (12 in total), of which there are always more than half of the board of governors. And the reserve banks are private, so the state does not have a controlling stake.
At that time, the dollar was still pegged to gold (as we can see, this is far from the specificity of the Bretton Woods model), and therefore it was difficult to print them directly, without restrictions, to satisfy the interests of bankers. Therefore, during the "Great" depression, a different scheme was used, which made it possible to redistribute assets in favor of bankers, who could get a loan (in conditions of money hunger) on an almost unlimited scale. They received them, bought out interesting assets, and then the Fed removed excess liquidity from the money market. In other words, the Fed actually levied a special tax on all owners of money in favor of its beneficiaries.
Nevertheless, the share of financiers in the redistribution of profits was at that time limited, no more than 5% of its total volume. The trouble was that the bankers needed the emission and a wonderful tool was invented to obtain it: the Bretton Woods model. Its meaning was simple: the dollar was to become the main world currency and replace other regional currencies in reserves and circulation. This is precisely why the Bretton Woods reform of world finance was carried out.
At the first stage, it concerned only the Western world (the USSR participated in the conference and signed the documents, but then did not ratify them, and in 1950 the ruble-dollar peg was canceled, it was pegged to gold). But as a result, a colossal dollar emission resource was formed (the sphere of circulation of which was seriously increasing), which allowed the FRS beneficiaries to legalize this emission as their profit.
The economic meaning of this operation was that all of Western Europe (from which the process of turning the dollar into the world currency began) was in 1945 a mountain of broken bricks. And even if factories were built (and they were built), there was no one to sell their products. And the trick was that not only the Marshall plan (that is, dollar investments!), But also the US markets were opened for the countries of Western Europe. On which you could make a profit, sell your goods. But! Only for dollars.
Accordingly, already against these dollars (called "Eurodollars"), it was possible to issue national currencies (under the supervision of the Bretton Woods institutions, the IMF, the World Bank and the GATT, which later changed its name to the WTO) and pay salaries with them, ensuring domestic demand … But this whole model could only work because at that time the US share in the world, both in terms of consumption and production, was more than 50% of the world.
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Then this scheme was repeated for Japan and Taiwan (after 1949, the proclamation of the socialist PRC), for South Korea and Hong Kong, and, finally, for China. By the way, it is completely incorrect to compare the growth of China and the USSR: if the USSR had gained access to the US markets, the economic growth in it would have been colossal. But neither the USSR nor Russia got access to American markets.
After the crisis of the 70s (which was associated with the fact that all potential areas of the dollar's expansion were exhausted, and the share of the financial sector in the redistribution of profits in the United States increased to 25%), the incipient Reaganomics policy gave the Bretton Woods model its final form.
Now she looked like this. On the one hand, transnational banks, at the expense of emission dollars, invested in countries with cheap labor, which made it possible to create production of cheap products there. On the other hand, at the expense of the same emission dollars, private demand in the United States (and other countries of the Western world) was credited, which made it possible to dramatically raise the standard of living of the population and form the dominant social system "middle" class, form a stable stereotype of consumer behavior.
From 1981 to 2008, the average US household debt rose from 60-65% of real disposable income to more than 130%. At the same time, the cost of servicing this debt was constantly decreasing, since the cost of the loan was falling (the Fed's discount rate for the same period fell from 18% to practically 0). At the same time, the purchasing power of the average wage in the United States is at the level of the late 1950s. But the share of the financial sector in terms of the redistribution of profits in their favor increased to 50% (and at some moments it rose even higher).
By 2008, the situation became critical: citizens of "developed" countries are spending consistently more than they actually earn, private debt is overcharged, and it is impossible to refinance it at low rates. The Bretton Woods system is deadlocked. By the way, I would like to draw your attention to the fact that this system has nothing to do with the mechanism of currency exchange.
Nevertheless, the Bretton Woods institutions (IMF, WTO, World Bank, rating agencies affiliated with them, consulting and audit companies) continue to strictly demand compliance with the rules they adopt. In particular, the withdrawal of budget money from the Russian economy (the so-called "budget rule", according to which all oil revenues from the excess of world prices above a certain level are directed outside the country), a ban on restricting currency speculation, restrictive monetary policy - these are all the requirements of the IMF.
The trouble with the entire system is that it is no longer able to provide economic growth in the world. Emission no longer causes growth; moreover, for more than 10 years capital has not been reproduced in the world. Bankers would not be very concerned about it if they had control over the issuing institution, but the Bretton Woods reform of world finance in 1944 was not brought to an end, the Fed remained in national jurisdiction. Bankers have tried to change this situation over the years since then, in particular, in 2011, but they did not succeed (in particular, because of the famous "Strauss-Kahn case"). And today the new President Trump is actively trying to crush the Fed's leadership and take it out of the nominal control of bankers.
In general, today we can say that the Bretton Woods model of world finance has finished its history and the most important question that arises at the same time: what will the new model be. But this is a topic for another article.
Responses to criticism
The system of international settlements is deeply secondary, the Bretton Woods financial and economic model was created to solve other problems. The main ones are:
- legalization of share premiums for transnational banks;
- the redistribution of real assets and profits from them in favor of transnational banks (the share of the financial sector in the redistribution of profits in the United States increased from 5% to 50%);
- obtaining instruments of legal control over ideology and the education system all over the world.
These are the tasks of b.-v. the system decides in the first place, but they are not legalized, not to say taboo. And there is another very important point, which is partially legalized: b.-v. the system ensures the growth of the world economy. Actually, it is precisely the impossibility of ensuring growth any longer that causes a strong desire in the world litas to deal with the other three points, and in recent years they have begun to gradually be removed from the tabulation. So far, however, only at the elite level. And it is precisely this that is the main factor in the destruction of b.-w. systems. Just in case: the model differs from the system in about the same way as the drawing differs from the finished product.
The place of the dollar in the world was determined by the size of the US economy, once this economy accounted for more than 50% of the world. Today it is less than 20% (in terms of GDP) and only the third largest (after China and the EU). The place of the dollar was determined by the fact that it was on it that the B.-V. the system that provided economic growth. No growth - the dollar started having problems. Being determines consciousness, not vice versa.
Does anyone say that the United States is the main beneficiary? No, the United States receives only its share, like everyone else, only indirectly. The main beneficiary in this process is the elite of the "Western" project, the very transnational financiers through whom the legalization of the issue passes. The national elites of the United States and transnational financiers are fierce enemies today who fight for life and death! So it is entirely possible that the United States will become the main victim of this fight.
You correctly understand how the issue of credit differs from the money issue, but tearing one off from the other is a mistake. A living example is the 2008 crisis - you cannot increase the credit multiplier indefinitely.
In conditions of instability, people are fleeing to the most liquid assets, that is, to the dollar. But this is only as long as the crisis. Remember, the main problem is the lack of economic growth. And for unobtrusive. the system must be canceled. As soon as it is canceled, they will start getting rid of the dollar. Everywhere. Except, of course, the dollar zone itself. By the way, a very interesting question is how will they decide at the "new" Breton Woods, what to do with dollars that are outside the new dollar zone? Will I accept them and how?
And this is already liberal propaganda, compare it with the statement of Professor Nightingale. It is the IMF that fully determines our monetary, foreign exchange and fiscal policies. Those who refute this either work for the international banking lobby (for example, with the money of Soros or Khodorkovsky), or for Russian liberal structures, or they are a complete idiot.
Author: MIKHAIL KHAZIN