Commentary Type

Currency Wars, the Economy of the United States, and Reform of the International Monetary System



I am deeply honored to be invited to present this twelfth annual Stavros Niarchos Foundation Lecture at the Institute and want to take the occasion to add my personal gratitude to the Stavros Niarchos Foundation, led and represented here by Spyros Niarchos and Andreas Dracopoulos, for making this series possible and for supporting it so generously at the Institute over the past decade.

I began my professional career in international economic policy almost precisely fifty years ago and spent much of my first two decades in the US Government, first working for Dick Cooper (who is here) among others at the State Department, then as Henry Kissinger’s deputy for foreign economic policy at the National Security Council and subsequently in charge of the international part of the Treasury Department under Secretary Mike Blumenthal (who is also here). With enormous help from many people in this room, especially Pete and Frank Loy, I began my stewardship of the Institute thirty-two years ago. In presenting today’s lecture, I want to draw on both sets of experiences to analyze the dramatic evolution of the world economy, and especially the role of the United States within it, over the past half century. I will rely heavily on the research of my Institute colleagues, which has been responsible for its and much of my success, over the history of this institution. At the urging of my colleagues, I will also try to spice up the presentation with a few anecdotes drawn from my personal recollections – though I hope you will not conclude that I have moved too far into my anecdotage just yet. A full text of my lecture, which adds several arguments that I will not have time to address tonight and is replete with tables, footnotes and references, will be available after the presentation.

When I was discussing what topic to address tonight with Adam a few weeks back, he suggested that I might want to celebrate the triumph of competitive liberalization as the driving strategy for the global trading system, an idea which I conceptualized and helped implement in the middle 1990s as chairman of the APEC Eminent Persons Group and then in a series of papers after Carla Hills had gotten it going as USTR and as Bob Zoellick then carried forward so effectively during his tenure in that position, and which is now proceeding boldly with negotiation of the three megaregional agreements: throughout Asia, across the Pacific (beginning to fulfill the original APEC vision) and across the Atlantic. Alternatively, I could have reiterated my (and Jacob Kirkegaard’s) conviction, which has proved correct so far, that the euro will survive its current crisis and perhaps emerge stronger as a result of the policy and institutional reforms that its member countries have been forced to adopt at an accelerated pace. But I decided instead to revert to the topic of my first book, which has concerned me deeply throughout my career, the shortcomings of the international monetary system and particularly their effects on the United States.

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