Are we at the end of 'Bretton Woods'?: White House reconsiders post-WWII world financial system

Omni Mount Washington, Bretton Woods
RJ Peltz-Steele CC BY-NC-SA 4.0

"Bretton Woods," I said.

"Are you sure it's still on?" he asked.

That was part of my conversation with a motel manager in Carroll, N.H., a couple of weeks ago when I was at Bretton Woods for the annual meeting of the New England Political Science Association (NEPSA).

We were talking about where I was headed in the north of New Hampshire, and I answered the man that I was bound for an event at Bretton Woods. I realized later that he thought I meant the ski resort. I could see the slopes from the Omni Mount Washington Resort opposite, where NEPSA was meeting, and the snow cover was waning, yielding to rain.

I did not think he meant, but thought it would be funny if he had, that "Bretton Woods" might be over: meaning not the ski season, but the global financial system built around the International Monetary Fund (IMF) and World Bank.

That system, and the twin institutions (one a predecessor of the World Bank), were conceived at the Mount Washington hotel at the Bretton Woods Conference in July 1944, before the end of World War II. It was widely understood by then that a lack of multilateral economic cooperation was a key failing of the interwar period that led to a second global catastrophe. 

Nevertheless, world leaders, including the Americans and British, were not all yet convinced in 1944 that economic cooperation, especially with a reconstituted Germany, much less Japan, would be in their national interests. Bretton Woods welcomed a who's who of the times at the intersection of economics and politics, such as the British economist John Maynard Keynes. So in the end, the conference proved persuasive to skeptics.

"The Room Where It Happened":
the Gold Room, where the Bretton Woods Agreement was signed
RJ Peltz-Steele CC BY-NC-SA 4.0

 

On a tour of the stunning, now-Omni hotel while I was there, I learned that Bretton Woods was chosen as a location for the high-level meeting in bello because its location between two notches in the New Hampshire mountains afforded it remarkable physical security. I found that that security is still a thing even in the information age, as my cell phone found signal only intermittently. I had to use the public library in Carroll to meet with my International Law class on Zoom.

The Bretton Woods Conference resulted in a system of consistent currency convertibility and installed the IMF as a kind of backstop, or currency reservoir, to help countries avert spiraling domestic destabilizations that might otherwise threaten global security—such as the collapse of the German economy that fueled the rise of Nazism. The Bretton Woods conversion system lasted as long as the gold standard, until the 1970s, and what followed, what still functions today, is a direct descendant.

And now all that might change. As a headline asked in The New Republic (TNR) on April 21, three days before I arrived at Bretton Woods, "Will Trump Finally Kill the Bretton Woods System?" 

As TNR explained, Project 2025 is not on board with the global financial system, despite its facilitation of American dominance of the world economy since World War II. The rightest wing rather sees the Bretton Woods system as part of the globalist agenda to subordinate U.S. interests to a new world order. In this telling of it, the IMF and the World Bank are just two more UN-adjacent intergovernmental organizations that suck resources from the American economy to subsidize the world's welfare-indulgent masses.

It is true that the IMF and World Bank invest in poorer parts of the world. But those poorer relations sometimes see these investments as more imperialism than charity. I studied World Bank projects as long as 30 years ago and witnessed the thorns of economic hegemony that came with the roses of infrastructure development in Latin America. There's been a lot of reform since, but nationalist critics see thoughtful multistakeholderism as an ebbing of commitment to quid-pro-quo foreign aid, rather than an all-boats-float scenario.

The IMF has long been at the middle of similarly conflicting perspectives. High-GDP contributors complain about the organization's generous loans and patient debt restructuring. Meanwhile, countries on the receiving end see IMF loans as a Hobson's choice, complemented by promises of private investment that never materializes and delivery into an addiction-like cycle of economic dependence that knows no off ramp.

Bretton Woods ski slopes
RJ Peltz-Steele CC BY-NC-SA 4.0

Climate change has exacerbated these tensions. Small-island and economically weaker nations have experienced an uptick of costly, destabilizing events, increasing demand for aid from developed economies. Meanwhile, aid recipients point out, not without reason, that the loan sharks got where they are through the very resource exploitation that they seek to restrain in the developing world. And with global temperature set to rise for the near future no matter what we do, no amount of economic and governance reform can turn back the clock on the damage sustained.

So need rising and prospects dimming for a return on investment, the Trump Administration contemplates bailing on Bretton Woods. You see it in the President's infamous tariff chart, which, analysts worked out, was not calculated to impose reciprocal tariffs, but to use tariffs as a weapon against trade deficits.

I as much as the next guy want the overworked American laborer to get a fair shake in the world. For a post-industrial economy, we work too many hours, enjoy too few benefits, and suffer an outrageously high cost of living, all summing wretched prospects for socioeconomic mobility. Trump is right that the IMF could care more about trade imbalances. 

But foreign social democracies are a scapegoat. Most of Americans' economic misery is self-imposed at the beckoning of a fat corporatocracy feasting on the deepening wealth divide.

An America-first policy that requires exiting the Bretton Woods institutions gives off an eerily 1930s vibe. And that didn't work out so well the last time.