So as I read this, a Bretton-Woods–style system of stable exchange rates would be a potent weapon in the war on terror. You identify the countries harboring problematic insurgencies, set your adjustable peg high enough that insurrections can’t operate effectively, and watch the rebellion wither! Is there any problem FDR’s policies can’t help us solve?
Actually, rhetoric like this — pinning hopes for world peace to the Bretton Woods system of stable exchange rates, and thus freer trade and capital flows — was not at all uncommon. As one participant later recollected,
Peace was seen as linked with world prosperity, and prosperity, with free trade, free capital movements, and stable exchange rates.
He goes on to admit, “Although the causality was ambiguous….”1
1Raymond F. Mikesell, “The Bretton Wood Debates: A Memoir,” Essays in International Finance no. 192 (March 1994), International Finance Section, Department of Economics, Princeton University, 4.
The Edge of the American West 
3 comments
September 1, 2010 at 1:19 pm
undergrad
The downside is that the US would lose its independence in making decisions over monetary policy. That would make me uncomfortable given the current economic conditions.
September 1, 2010 at 5:09 pm
eric
Well, not necessarily. It’s a currency trilemma, so you can have two of the three desiderata — and under Bretton Woods they had both monetary independence and stable exchange rates, just limits on capital mobility.
September 1, 2010 at 5:56 pm
undergrad
Interesting. I stand corrected.
P.S. The blog is teh awesome. Thank you.