We've had a flood of ideas about the word Bretton-Woods lately! I was just writing. The American thought of a crypto-Bretton-Woods, and now I want to inform you about the thought of erstwhile Greek finance minister Yanis Varoufakis. Unlike the American idea, it is actually ideologically linked to this celebrated conference. Varoufakis proposes a "revival" of John Maynard Keynes' thought of creating a separate clearing currency. However, this would not be taking over 1 to 1 Keynes idea. Varoufakis proposes any modifications. Interestingly, the article was originally published in Chinese on Quancha portalOh, my God!
By the way, that's where I first met him. Of course, I don't know Chinese, but what artificial intelligence is for. The translation into Polish was not very convincing, but the translation into German and English seemed to be good. However, I had no assurance in them, and with a discussion of this article I waited until it appeared in English on Varoufakis' website. Turns out I waited unnecessarily due to the fact that the translations were perfect. Here's the article.
Start of translation.
Written by Yanis Varoufakis
Donald Trump has made it impossible for any sensible individual to delude himself that global business can function as usual. We should all be happy about this, even if we are angry at Trump's shocking behavior, decisions and narratives.
The global economy will either be rebalanced or broken down in a way that can make the 2008 crisis look like a fairy tale. The only question worth asking is: Who and what can do to correct the imbalance that destroys the Global Most (developing countries) and creates a real spectrum of fascism in the Global number (Western economies)?
We know who is incapable to step in and contribute to the rebalancing of the world: the European Union. The reason why the EU excluded itself is to look in the architecture of its single currency (euro) and then in the unbreakable refusal of the EU to usage the stormy euro crisis as an chance to federalise fiscal and investment decisions. As a result, the EU has entered into long-term, sustainable economical stagnation and political fragmentation.
We besides know who does not want to aid reconstruct balance in the world: the United States. While U.S. Treasury Secretary Scott Bessent tells banals about restoring the balance of trade and capital flows, the Trump administration for which he works is only curious in conflicting objectives, on the 1 hand lowering the dollar value, and, on the another hand, bringing even more capital to the United States – a contradiction which can only be resolved through mass coercion, which the US lacks both strength and discipline to implement.
Who's left? The answer is: China. As early as April 2009, at the G20 gathering in London aimed at global monetary policy coordination to halt the North Atlantic financial collapse, the Chinese delegation welcomed the thought of returning to the 1944 Bretton Woods conference and reviving John Maynard Keynes' proposal (known as the global Settlement Union, ICU). Unfortunately, in 2009, the United States rejected Beijing's suggestion, in precisely the same way as they rejected Keynes' proposal in 1944. The remainder is simply a sad communicative of the past sixteen years: a planet whose imbalance has grown and is presently getting out of control.
Given that the EU cannot and the US will not aid to control the devastating imbalance, what can China do? My answer is to establish a fresh Bretton Woods without the USA and the EU, starting with BRICS+ and then accepting another countries erstwhile the benefits of this fresh strategy become clear. To avoid being misunderstood, my proposal is not that China should become an alternate global hegemon by resurrecting the actual Bretton Woods strategy (as it was in the 1950s and 1960s). No, my proposal is that China should build a truly multilateral system, in close cooperation with BRICS+ partners – fresh Bretton Woods reflecting Keynes' 1944 proposal, the same proposal that president Roosevelt's squad rejected to establish American hegemony.
Before I explain how this fresh Bretton Woods would work, let me address any of the objections that are likely to be raised – especially in the West. Many will argue that China cannot be the basis of any global financial strategy due to the fact that it imposes capital controls. Have they forgotten that Bretton Woods (both the actual strategy and Keynes' proposal for an ICU) was based, rather reasonably, on capital control? Others will protest that in order to be at the centre of a large global trading and monetary system, the country must have a trade deficit so that others can have a trade surplus with it. Have they forgotten that Bretton Woods' first goal was to keep US trade surpluses? Apparently, these reservations reflect the prejudices of the opponents more than any serious economical analysis.
I will now decision on to how the fresh Bretton Woods could function as a actual global strategy based on the deficiency of hegemony and common benefits. To counter the trend of the marketplace trading strategy to make increasing imbalances, Keynes recommended replacing any strategy in which "...the adjustment process is mandatory for the debtor and voluntary for the creditor"[1) where the work to adapt falls symmetrically on debtors and creditors. Here's what a strategy like this could look like.
Participating countries shall keep their own currencies and central banks. All trade and capital flows between countries are denominated in a common digital unit of account; let us call it Space. The central bank of each country maintains a reserve account in Cosmos in a common institution (e.g. the existing fresh improvement Bank) that emits Cosmos on the basis of a transparent digital distributed book and algorithm that adjusts the full supply of Cosmos in a pre-agreed manner comparative to the volume of planet trade, besides allowing an automatic anti-cyclical component that increases the global supply of Cosmos in times of overall slowdown [economic].
Monetary markets would function as they do now, and the exchange rate between Cosmos and different currencies would change in the same way as the IMF's peculiar drawing rights, i.e. dollar, euro, yen, etc., are changing. The difference, of course, would be that within the fresh Bretton Woods, all payments between participating countries would pass through the Space account in their central banks.
So far, nothing that has been proposed mitigates the underlying trend to build imbalances in the strategy (large deficits and trade surpluses). However, fresh organization solutions let for 2 key interventions, not only to reduce imbalances but besides to unlock the tremendous possible of common development. I call these 2 interventions "[equipment] charge" (The Levy) and ‘cost’ (The Charge). This is what they are and how they work.
Fee: Commercial imbalance charge to be charged annually from the Cosmos account of each central bank in proportion to the current account deficit or surplus and paid to the Joint improvement Fund Common improvement Fund (CDF) run by a multilateral space emitting institution
Cost: Private financial institutions are to pay a fee “surge“to the same joint fund, CDF, in proportion to any sharp increase in capital flows from the country – resembling the increase in prices for traffic jams which companies specified as Uber collect from their customers during periods of the highest traffic volume.
The nonsubjective of the levy is to encourage countries with a surplus to increase national spending and investment while systematically reducing the global purchasing power of countries with a deficit. Monetary markets will reflect this by adapting exchange rates more rapidly to current account imbalances and eliminating a crucial proportion of capital movements that presently support chronically unsustainable trade. The fee will automatically punish speculative, stock-flows and outflows of capital, but will not give bureaucrats area for manoeuvre nor require firm capital control.
Thanks to this joint fund of the fresh Bretton Woods, CDF, the participating countries abruptly have an additional global sovereign wealth fund (except existing fresh improvement Bank funds) without the request for capital support. At the same time, it meets 2 objectives: balancing global trade and generating fresh resources for a fair transition to a global green economy.
Is it feasible? I'm certain it is. China has technology, in peculiar expertise in highly sophisticated digital payment systems. The remainder of the planet urgently needs a trading strategy that generates stableness and common benefits, not imbalances and exploitation. We besides have organization experience with global clearing systems.[2] What is missing from the planet is simply a political process that can combine all these elements.
Would it not be delicious irony if Donald Trump's shock therapy, which in his opinion aims to reconstruct the balance of the planet economy, helped to motivate China to take on the challenge to do so in collaboration with countries around the world, not only BRICS, in order to build a multilateral strategy that Keynes proposed in 1944 but which was rejected so that the United States could dominate the planet for another 8 decades?
[1] See J.M. Keynes: Activities 1940-44: Shaping the post-war world 8th August, 1941, p.28, ‘The Clearing Union’, Cambridge University Press, 1980
[2] For example, the Target2 account of the European Central Bank, which accounts for balance of payments deficits in the euro area.
End of translation.
To be honest, I don't have a very good opinion of Varoufakis, but I appreciate his commitment to the global trade settlement dilemma. Unfortunately, his thought is simply a typical example of the problem facing the world: a deficiency of reasoning separated from the current monetary strategy and the current knowing of money. This is the main problem of the BRICS countries!! People educated in the current strategy are incapable to solve this problem. They just can't think otherwise! My favourite example is the Bible. Moses continued to “walk” in the wilderness until a generation of slaves died out. Free men entered the Promised Land. Unfortunately, erstwhile the current “specialists” die out, fresh ones will come to their place, the same. The fresh Moses can't do anything here! Varoufakis himself is an example of this! It proposes to leave the abroad exchange markets. This is simply a typical slave neoliberal belief that markets will do everything best! However, reality shows that what is happening in these markets has nothing to do with the economy and even detracts from common sense! Markets work for speculators, not for the benefit of states and societies!!
But let's yet get to Varoufakis' idea. To be honest, I've been reasoning about the mechanics of his operation for a long time, and I have questions that are unanswered. I don't realize how the exchange rates to Space would work. Varoufakis compares this to peculiar Drawing Rights SPC (tracts for what?) IMF. But they are linked to the currency basket and the exchange rate of the SPC is the resultant exchange rates of the component currencies. Space would be a model unit, unrelated to any another unit. Furthermore, it would be unavailable for marketplace speculation as it would only be in central banks accounts. Markets could, of course, set the rates of local currencies towards Space, but central banks would not gotta respect them. Well, unless that's their duty...
If the thought of a levy (The Levy) is comparatively understandable, this cost (The ChargeIt doesn't make any sense. Space is to be a currency only for interstate settlements. In that case, private financial institutions would not have access to it, and how could they deposit anything in that currency!?
Questions can be multiplied, but they are not so crucial at the moment. The description of the fresh unit of account is besides short, not clear, and seemingly not full considered.
It is crucial that specified an thought even appeared on the Chinese portal. Varoufakis is right that the only country that could improvement the world's accounting strategy is China, and seemingly it was mainly about making the Chinese aware of that fact alternatively than any concrete project. 1 can only hope that this thought will be a pebble that will trigger an avalanche of another ideas.
I do not anticipate that in the coming years it will be possible to introduce any alternate to the dollar global settlement system. The dollar position is weakening quickly, but he and the US are besides strong for the remainder of the planet to afford specified insubordination. We must wait for further weakening to minimise the hazard of atomic war. But it is vital that we reflect on alternate ideas present and analyse them in order to have the task ready erstwhile the chance comes.
In my opinion, it is crucial to focus on the global clearing currency, but it will not aid in the situation of trade and economical wars. At present, only giants specified as China, Russia, India or Brazil have opportunities for development, and even in their case it is not easy. Hence, pooling forces in initiatives specified as BRICS to counter western dominance. The example of our country shows that specified improvement is highly difficult, if not impossible, due to the fact that any emerging competition for the Western manufacture is being destroyed. Paradoxically, the best chance for the economical improvement of our country was the period of sanctions in the 1980s. But then the economical and political strategy did not let this chance to be used. present Russia is taking advantage of this opportunity. No country developed without the first isolation of its own market. Western sanctions themselves created this chance for Russia and if it were not for the diversionary policy of the head of the Russian central bank and deficiency of hands to work, Russia's economical improvement would be even faster today. Paradoxically Russian entrepreneurs are more afraid of abolishing sanctions than extending them!
By the way, I got it from a friend a while ago. link with the question if I do not know who is the author of these (retorative) questions. Fullford (not a reliable origin of information for me) only writes "Polish intellectualIt’s okay. ” Unfortunately, I don't know who it was either. There are inactive a fistful of people in our country who deserve to be an intellectual, but the average Kowalski has never heard of them, due to the fact that in the media of the main sewage and unfortunately besides in most alternate ones, there is no area for intellect. But the questions are worth spreading, so I'm bringing them here. possibly individual knows who the author is.
1) Did the Russians buy the pearls of the Polish manufacture for a penny?
2. Is it the Russians' responsibility that we got free of our textile, chemical, pharmaceutical, construction, electronic, mining, metallurgical, defence, transport, telecommunications, shipbuilding and many others?
3) Did the Russians buy Polish factories for a fewer percent of their actual value to shut them down, fire people and transport equipment abroad?
4) Did the Russians buy Polish banks and now Russian banks suck Poles out of their hard-earned money in this neocolonia called the 3rd Poland?
5) Did the Russians forbid us to subsidize the shipyards?
6) Did the Russians tell us to bury the mine shafts so they could never be utilized again?
7) Did the Russians destruct our agriculture and fisheries?
8) Was it the Russians who told us to introduce and increase criminally advanced taxes and not let them down?
9) Did the Russians bring 50 hypermarkets into our country that don't pay a penny to the Treasury?
10) Are the Russians forcing us to pay a 100 billion membership contributions a year?
11) Do Russians destruct and then plan to buy Polish railways?
12) Do the Russians want to privatize our forests?
13) Will the Russians buy out our waterworks and power plants?
14) Do the Russians and their corporations have almost free concessions to extract everything our Polish land has?
15) Are the Russians destroying the Polish army?
16) Do the Russians claim to decide our future, frequently in violation of our Constitution and laws passed in our country?
17) Did the Russians send our troops to pointless wars in Iraq and Afghanistan?
18) Are the Russians sending our troops to Libya, Chad or Mali to fight for their claims to their gold and oil deposits there?
19) Are all Polish politicians on pilgrimage to the Russians to welcome the Kremlin under the walls, promising a strategical partnership to the Russian intelligence heads?
20) Are the Russians in possession of GMO patents and forcing us to introduce this poison?
21) Are the Russians forcing us to buy vaccines against swine or bird flu?
22) Do the Russians spray chemicals over our heads and shrug at the fact that the world's bee population is dying due to this?
23) Do the Russians go crazy in our country, claiming to do anything they like about it?
24) Do Russian passports authorize the ‘recovery’ of tenements or arable land?
25) Is there a GRU in our country with soldiers armed with device guns, with trips by young Russians, who are showing places of “execution of Russians” and “Polish murderers”?
There are rhetorical questions, but there is no chance in our country that they will scope the average citizen.
