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The Bear of Bretton Woods

BERKELEY – This is the season for international monetary conferences. In March, national leaders assembled in Nanjing, China, to speechify on exchange and interest rates. And, in early April, leading thinkers and former policymakers met in Bretton Woods, New Hampshire, the birthplace in 1944 of the International Monetary Fund and our dollar-centered international monetary system.

The 1944 Bretton Woods conference was marked by a clash between the United States and the United Kingdom, represented by the economists Harry Dexter White and John Maynard Keynes, respectively. The UK wanted a system in which global liquidity would be regulated by a multilateral institution, while the US, for self-interested reasons, preferred a dollar-based system.