Conclusions

Summary

This final chapter of the book first summarizes the conclusions drawn from each chapter, before returning to the initial questions and hypotheses raised in the Introduction. The chapter ends with a few overarching conclusions.

Chapter 1 argued that the Great Depression and World War II – both problems and goals for the future – influenced how economists thought about policy, inflation, interest rates, deficits and government intervention. Policymakers had a complicated relationship with their former allies and enemies as their world became more interdependent and appeared to require some kind of collective action. The Bretton-Woods Agreement, which had created the current monetary system as well as supranational institutions like the IMF, the OEEC (now OECD) and the World Bank, continued to play an important role in the development of solutions to payments imbalance and liquidity issues. Tensions began to build as US policies jeopardized confidence in the dollar, the primary medium of international trade, even as Europe and Japan were experiencing rapid economic growth. Economists in Europe and the USA were exploring solutions that included wholesale system change. An announcement by US Treasury Secretary Douglas Dillon set a series of monetary system studies in motion by the IMF and Group of Ten – and also by Machlup, Triffin and Fellner, leaders of the Bellagio Group.