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Wolfgang Münchau

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Dollar’s last lap as the only anchor currency
the Bretton Woods II theory

Wolfgang Munchau, FT November 25 2007

In 2006, the US ran a current account deficit of more than 6 per cent of gross domestic product, a level that would normally be considered excessive. The Bretton Woods II theory says that this state of affairs is both desirable and sustainable. To say that not everybody agrees with this theory would be an understatement.
It now appears that no matter whether you find this state of affairs desirable or not, it probably is not sustainable.

In some respects, Bretton Woods II appears like a giant money laundering cartel. You buy my goods and, in return, I give you the money back in the form of a loan. It is, perhaps, no surprise that it took a credit market crash to bring that macroeconomic scam to an end.

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