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
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
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.