From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Mon Jun 11 2007 - 00:54:28 EDT
In our old debate about money, I also suggested that inflation targeting in terms of a basket of goods represented something of a return to commodity money, though I disagree with Paul B and Claus that gold is today the universal equivalent. I was certainly wrong however about the actual content of the basket of goods on which inflation targeting keeps its eyes. rb http://eh.net/bookreviews/library/1223 He states that the Bretton Woods monetary order "was unique to monetary history," in being designed by experts "from scratch" (pp. 133, 188), but also sees it as a "vain attempt to revive Š commodity money" (p. 189). He reasonably follows much of the literature in using "Bretton Woods" as a convenient label for a period rather than as a system in actual operation. He might have followed up the implications of his description of the new system by pointing out that with "inflation targeting" we have returned to commodity money. A dollar, pound, or Euro is convertible into a basket of goods. Of course inflation targeting is subject to the government's discretion, but that was also true of the gold standard. The new system is also like the old in rejecting the managed-money theories that prevailed during much of the transition, and delayed it. Monetary Theory and Bretton Woods: The Construction of an International Monetary Order | Book Reviews Published by EH.NET (June 2007) Filippo Cesarano, Monetary Theory and Bretton Woods: The Construction of an International Monetary Order. Cambridge: Cambridge University Press, 2006. xiii + 248 pp. $80 (hardback), ISBN: 0-521-86759-2. Reviewed for EH.NET by John H. Wood, Department of Economics, Wake Forest University.
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