The United States and the Global Economy: From Bretton Woods to the Current Crisis
Frederick S. Weaver
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Financial collapse. Global recession. The revival of free-market policies. Massive and increasing inequalities. Housing bubbles and record foreclosures. Severe strain in the European Union. Emergence of China and other major players on the international economic scene. Every day, media outlets bombard us with news and possible explanations for the financial, economic, and political crises. In The United States and the Global Economy, Frederick S. Weaver gives readers a concise introduction to the patterns of change in international financial and trade regimes since World War II in order to clarify recent global economic turmoil. Weaver has compiled a clear chronology of major events in the international economy to show how they have reflected and shaped changes in the domestic economy of the United States. Although U.S. dominance over the world economy is not as complete as it once was, U.S. domestic economic processes continue to have profound effects on global economic affairs.
The United States and the Global Economy is serious but not grim, and it familiarizes readers with the vocabulary of key elements of international economic analysis and their relationships, such as balances of trade and balances of payments, foreign direct investment and foreign portfolio investment, and the meaning of most-favored-nation agreements. The United States and the Global Economy is a concise, informative book that is of interest to anyone seeking to understand the current international economic and political disarray.
between the international economy and the U.S. economy to illustrate their interactions. After a brief look at U.S. involvement in the international economy before World War II, chapter 1 describes the Bretton Woods conference of 1944, the dollar exchange standard, and the three international institutions created to monitor and guide the new international structure. Although not a direct result of the Bretton Woods agreement, the European Economic Community, established in 1957, was the fourth
three levels of government were major employers. Supported by rising unionization and the explicit use of parity principles regarding wages, salaries, and work conditions, Public Sector jobs were linked with those in the Core Sector, and relatively desirable Public Sector employment, again like that in the Core, was restricted primarily by the availability of positions. Public employment was an important tool in dampening dissent from the unemployed and underpaid, but the Public Sector’s major
promoted the development of a financial industry that was far-reaching in scope, voracious in appetite, and increasingly free from regulatory control. Until 1981, income from interest payments had surpassed corporate profits in only one year since the first year of official national account statistics (1929), and that was in 1933, the depth of the Depression. The shift in sources of property income from profits to interest (that is, from production to financial transactions) suggests a
order was accompanied by a strong resurgence of faith that private competitive markets are the most effective mechanism for improving the material welfare of people in developed metropolitan nations as well as in Africa, Asia, and Latin America. The United States was an ideological leader in this free-market fervor and in its flip side: pervasive skepticism about collective (governmental) efforts to regulate the social order and ameliorate the negative effects of some market outcomes. The
as many U.S. dollars as they can and convert them to Japanese yen. If the U.S. dollar does decline in price, say to ¥60 to $1, or $0.015 to ¥1, the speculators go back into enough newly cheapened U.S. dollars to pay off their dollar debt and reap a 20 percent profit. There are two especially sweet aspects to this operation. Once a speculative attack begins, others will sense an opportunity and pile on, often forcing down the yen price of the U.S. dollar even if there had been no real reason