Nixon called time on the Bretton Woods system of fixed but adjustable exchange rates, under which countries could use capital controls in order to stimulate their economies without fear of a run on their currency.
No, this is arse about tit.
It was the system of fixed exchange rates which prevented stimulus. If you went off to tickle the scrotal sac of the economy, to stimulate it, you then came up against the boundary of having to defend your currency exchange rate. You then had to do all sorts of nasty raising interest rates, cancelling the stimulus (to continue our earlier analogy, akin to waving pictures of Anne Widdicombe/Margaret Beckett, to political taste, at it) in order to defend that currency rate. This was as true of Harold Wilson in 1966 as it was of Norman Lamont in 1992: raising interest rates three times by lunchtime wasn\’t it?
Fixed exchange rates were a constraint on the ability to stimulate. As shown by the way we came off the gold standard in 1931 in order to stimulate, as shown by the way we quite deliberately dropped the £ 25% in the last few years to do so.
And the suggestion about what we do next?
There is strong ideological resistance to the policies that make decent wages in a full employment economy feasible: capital controls, allowing strong trade unions, wage subsidies, and protectionism.
Dear God Almighty. Forward to the 17th Century! Medieval guilds, mercantilism…..has no one actually read Adam Smith?