Team Osborne party with John Maynard Keynes

11 June 2014

The Chancellor’s economic brain, Rupert Harrison, looked distinctly restless last night, sipping champagne in John Maynard Keynes’s drawing room. Osborne’s chief-of-staff, the architect the evil Tory austerity, did not seem entirely comfortable as he stood beneath an imposing mounted copy of The General Theory.

This awkward tableau came about thanks to the launch of a book about the Bretton Woods summit by Sky News’s Economics Editor Ed Conway. The party was gathered in the very house from which Keynes departed on his way to the famous conference in July 1944.

Conway said: ‘It’s quite rare to have a book launch these days. You either do it if you’re expecting a global best seller, or because it says something about the writer’s incredible vanity… we’re about to find out some home truths’. Spoken like a true capitalist.

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  • shiva
  • George McCarthy

    Towards the end of World War Two, when it became obvious that the allies were going to win and dictate the post war environment, the major world economic powers met at Bretton Woods, a luxury resort in New Hampshire in July 1944, and hammered out the Bretton Woods agreement for international finance. The British Pound lost its position as the global trade and reserve currency and its place was taken by the US dollar (part of the price demanded by Roosevelt in exchange for the US entry into the war). Without the economic advantages of being the world’s central currency, Britain was forced to nationalise the Bank of England in 1946. The Bretton Woods agreement, was ratified in 1945, and in addition to making the US dollar the global reserve and trade currency, obliged the signatory nations to tie their currencies to the dollar. The nations which ratified Bretton Woods did so on two conditions. The first was that the Federal Reserve would refrain from over-printing the dollar as a means to loot real products and produce from other nations in exchange for ink and paper; basically an imperial tax. That assurance was backed up by the second requirement, which was that the US dollar would always be convertible to gold at $35 per ounce.

    Of course, the Federal Reserve, being a private bank and not answerable to the US Government, did start overprinting paper dollars, and much of the perceived prosperity of the 1950s and 1960s was the result of foreign nations’ obligations to accept the paper notes as being worth gold at the rate of $35 an ounce. Then in 1970, France looked at the huge pile of paper notes sitting in their vaults, for which real French products like wine and cheese had been traded, and notified the United States government that they would exercise their option under Bretton Woods to return the paper notes for gold at the $35 per ounce exchange rate. Of course, the United States had nowhere near the gold to redeem the paper notes, so on August 15th, 1971, Richard Nixon “temporarily” suspended the gold convertibility of the US Federal Reserve Notes.

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