This paper proposes an interpretation of current global imbalances based upon the nature of the international currency, its main objective being to present a “logical experiment”, illustrating how alternative models of international financial organization may produce opposite results in the global economy. In the current organization, "key currencies" work as international money. Keynes, by contrast, proposed that this role should be assigned to a supra-national, "credit" money. While the world currently lives in what has been defined as a “balance of financial terror”, Keynes tried to achieve a more peaceful type of “international balance”. I argue that some of the technical provisions of the “Keynes Plan” may still – at least in principle- provide useful remedies for international disequilibria, by remedying the asymmetries of the current international monetary system and curbing both inflationary and deflationary pressures on the world economy.
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Paper provided by Political Economy Research Institute, University of Massachusetts at Amherst in its series Working Papers with number
wp156.
Find related papers by JEL classification: E1 - Macroeconomics and Monetary Economics - - General Aggregative Models F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
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