John Maynard Keynes, the famous British economist, referred to the gold standard as a “barbarous relic.” He criticized its use because he believed it restricted governments’ ability to manage their economies, basing his attack on the thesis that once a country had joined it, it would rule out inflationary money printing, but would block governments from prescribing monetary and fiscal actions to offset downturns. Since he did not get his wish to create a global central bank to deal with persistent surplus and deficit countries to eliminate imbalance, the post-war Bretton Woods system was implemented as a sort of compromise: a scheme which made the dollar the undisputed global currency because the U.S. was the world’s largest debtor, running massive deficits to finance WWII, and agreeing to tie the greenback to gold at $35 an ounce…
A Macro Market View by Hubert Marleau
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