ABSTRACT
Following up on the previous chapter, this chapter discusses the evolution of the international monetary order as actually set up at Bretton Woods in the light of Keynes’ monetary thought and Clearing Union proposal. Section 8.2 reviews the US’s nth country role as key currency issuer, underwriting the international dollar standard. Section 8.3 discusses the emergence of global imbalances and paradoxical capital flows, while Section 8.4 critically investigates the Bretton Woods II hypothesis and the ongoing US financial crisis – as the culmination of global imbalances. Section 8.5 then critiques Bernanke’s “saving glut hypothesis” and Greenspan’s “bond market conundrum” in the light of liquidity preference theory. Section 8.6 outlines required government action to counter the credit meltdown. Section 8.7 concludes.
