It's time for a new Bretton Woods

In July of 1944 the 44 nations of the free world sat down at a hotel in Bretton Woods, New Hampshire to design a new post-war financial system. The basis of the agreement was simple. The US dollar was tied to gold at an exchange rate of $35 per ounce and all other currencies were tied to the dollar with relatively fixed rates.

The system worked until the US tried to wage an expensive war without raising taxes to pay for it. (Why does that sound familiar?) The first sign of stress was when the US dropped silver out of our coinage in 1965 and went to slugs.

GWB is planning to convene an economic summit after the election. We doubt that the agenda will include a proposal to peg currencies to a gold standard as was done at Bretton Woods.