Quote: (09-06-2015 08:30 PM)Paracelsus Wrote:
What Bretton Woods is really about is gold. And in my respectful view, most people who point to gold as an efficient or desirable holder of value for that coming time when The Shit Hits The Fan ™, are really functioning off the idea that Bretton Woods is still in existence.
Bretton Woods was essentially an international monetary regulatory system -- a sort of currency UN declaration -- made in the latter stages of World War 2 to stop the Allies from attacking each other in currency devaluation wars (trade wars, that is), and to value everybody's different currencies against a fixed amount of gold.
This is pretty significant, since gold itself is a finite resource. When it is the measure of how much your currency is worth, it becomes essentially the most important currency and commodity on the planet. But the disadvantage of gold as the measure of a currency's worth is that the world's money supply as a whole cannot be expanded without finding more gold deposits; in all human history only 174,100 tonnes of gold have been mined. On the other hand, it made hyperinflation harder for governments to pull off, since if a government was inclined to just issue more currency to pay off its debts, people simply abandoned that currency and started trading in gold (or other currencies that did hold their value).
That said, Bretton Woods has basically been dead since 1971, when the US finally repudiated the gold standard. And to be fair it was roughly the last country in the world to leave the gold standard anyway. There is not one currency left on the planet that is currently tied to anything concrete or tangible. They are all dependent on the promises of those politicians in charge of their reserve banks not to inflate away their debts.
Sarkozy's demand for a "Woods-like" system is posturing and nothing more. Without a gold standard, any such system is basically meaningless since it has no real economic clout or standard to hold currencies against. And nobody is going back on a gold standard without a calamitous world war to put everyone's economy in the toilet sufficiently to even contemplate it. The world likes phantom dollars far too much to let them go without being forced into it by events beyond its control.
it has nothing to do with gold today. breton woods is the regulatory framework that determines how much commercial loans a bank can make vs the fiat deposits on hand.