David Levy - Vice President
Published September 1, 1994 | September 1994 issue
By Judy Shelton
Inspired by a Robert L. Bartley editorial ("Fix What Broke") in The Wall Street Journal, Judy Shelton began work on a book. Nearly a decade later we have Ms. Shelton's book before us. Entitled Money Meltdown, its release is indeed propitious, since 1994 is the 50th anniversary of the Bretton Woods agreement, and both Ms. Shelton's book and Bretton Woods were concerned with forging a new world monetary order.
Ms. Shelton, a senior research fellow at the Hoover Institution, gained national attention several years ago with the prescience of her other book, The Coming Soviet Crash, in which she reportedly predicted with a great deal of accuracy the events in the Soviet Union a year later. Similarly, in Money Meltdown she warns of an imminent crisis: the deepening turmoil in international currency relations threatening the global order. And she offers thoughts on how it might he resolved: principally through an international gold standard.
At first glance, it would appear that Money Meltdown is another libertarian offering, contemporized and from a slightly different point of view, arguing that we should return to the gold standard. Libertarian because if we were to speculate about Ms. Shelton's intellectual godfathers, one would have to pick Ludwig von Mises and Friedrich Hayek. Extending the speculation to her highest held values, we could only guess that among them would be the sovereignty of the individual.
No doubt Money Meltdown will be dismissed by some as just another iteration of a time-worn and virtually defunct argument. The publishers, on the other hand, see its destiny as a book of major influence.
Whatever the book's ultimate impact, it is clearly a worthwhile read, as Ms. Shelton has presented her thesis nicely and with abundant and convincing support. Books of the same ilk are typically difficult if not impossible for the lay reader to penetrate: not so with Money Meltdown. She reasons and writes in a non-mathematical style, free of formulae, charts, graphs and other typical economic conventions. Her book has an academic tone, but it is not written in the exclusive academic-to-academic style.
At the beginning of the book Shelton takes a look at John Maynard Keynes and Harry Dexter White and their efforts to arrive at a new world economic order before the international monetary conference at Bretton Woods. Near the end of the book, she offers an agenda for a new Bretton Woods, one that would extend the old Bretton Woods approach: "fixed exchange rates among national currencies anchored by a government commitment to redeem in gold." The difference would be to design a neosystem that would not fall apart under pressure as did the original Bretton Woods. That would mean, "The next Bretton Woods should be oriented toward the needs and rights of private citizens, as opposed to central banks, to ensure that the integrity of money is maintained on a continuous basis subject to the assessment of the people who use it daily." Furthermore, according to Shelton, "The next Bretton Woods should designate a core group of countries to offer gold convertibility rather than setting up a single dominant country to exercise a monopoly over the world's anchor currency.
A reading prerequisite for Money Meltdown is a reasonably strong interest in the subject. It's doubtful the casual reader could pick up Money Meltdown and stick with it. For the serious or semi-serious student, it will no doubt yield some useful historical insights and thought-provoking ideas. The thinker who favors arguments from the margin is most likely to buy the book's conclusions, although all readers should gain from Ms. Shelton's scholarship, whatever opinion they may hold about maximizing the potential for global prosperity.
If you read the book and it sparks an interest to pursue the question of fixed vs. floating exchange rates, I would recommend the Minneapolis Fed's 1989 Annual Report, "A Case for Fixing Exchange Rates," authored by Arthur J. Rolnick, director of research, and Warren E. Weber, senior research officer.