Getting out of Bretton Woods Was a Bad Idea
Robert Skidelsky & Vijay Joshi | November 11, 2008
Although little can be done until the financial crisis is over, it is time to think about exchange rate reform now. ++ Asian countries devalued their own currency while hording US dollar reserves to boost employment and growth. ++ This excess was pushed into housing bubbles in the US and UK by expansionary policies that fired up credit expansions. ++ Countries’ reserve needs must be met, “while avoiding the use of national currencies as international reserves.” ++ A new global exchange rate system must correct excessive imbalances.
