Bretton Woods

Summary

The Summit Bretton Woods, 1944

• Two weeks into operation Overlord on Saturday July 22 1944, after Japan had just lost Thailand, the best economic is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.   minds met at the Mount Washington to replace the previous iteratively evolved jumbled infrastructure that was failing to support global finance and economic cooperation, stability and growth.  It was to include rules and agreements on:
• Exchange rate mechanisms
• Money flows between countries
• Central bank interest rates;
• It was to be driven via concrete plans developed in advance by technical experts. 
  
• It was a response to the problems seen between the wars:
  
• The Peace of Versailles had failed:
• Onerous reparations leading to resentment.  The losers had no reason not to renege on the agreement as soon as possible.  Debts or reparations must match ability to pay or inflation will be generated.  The US is the United States of America.   wanted its European allies to repay the war loans.  Instead they felt Europe, and especially the UK is the United Kingdom of Great Britain and Northern Ireland.  , was trying to get more. 
  
• Collapse of the Gold Standard was a set of informal agreements between central banks:
  • To support operation of the global trade between nation states
    
  • To convert their local currency to gold at an agreed conversion rate when asked.  It was
    
  • Based on David Hume's price specie flow theory.  But in practice it suffered from a mismatch between:
    
  • An economy's changing situation
    
  • The rigid rules constraining central bankers and
    
  • The limited quantity of gold.  When America's economy expanded during the 1920s and gold flowed into the country, struggling European economies deflated to maintain currency parity with gold.  Economists such as Keynes argued it was more sensible to manage economies by responding to their situation within the global network. 
    
  had not been addressed
• US Congress ensured the League of Nations was irrelevant.  This led to
  
• Hyper-inflation in Austria and Germany 
• European economic is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.   collapse
• Trade wars
  
• The great depression and
• Inducing a further world war.  This unfortunate scenario had been predicted by Lord Keynes in his 1919 masterpiece 'The economic consequences of the peace.'  
• But there were also conflicting goals.  And out of necessity the teams were led by technical experts rather than the political leaders aims to develop plans and strategies which ensure effective coordination to improve the common good of the in-group.  John Adair developed a leadership methodology based on the three-circles model. 
  . 
  
• The US is the United States of America.   led team had the backing of Russia, China and Latin America to weaken the central position London still held in currency is legal tender which provides no interest payments to the holder.  It is a central aspect of money and in CAS is an analog of a short term potential energy token such as the high energy phosphate bond of the base ATP.  But the interaction of the geometric breeding and deaths of agents that perform actions and the linear increase in real resources, described by Turchin, results in the correspondence between energy and currency being complex and adaptive. 
  exchange.  Its leader was Harry Dexter White, deputizing for Treasury is the department of the treasury.  it is a federal government executive department created by Act of Congress in 1789 to manage government revenue.  The Secretary of the Treasury is a Cabinet officer.  To support funding of high cost investments: Disaster recovery, Wars, Famines; the treasury can issue debt instruments and manage the national debt. 
  Secretary Morgenthau. 
• The UK is the United Kingdom of Great Britain and Northern Ireland.   led team was nominally allied with India and Greece but was keen to carve out a protected zone based on the British Empire where debts would be rescheduled to help the UK rebuild towards its earlier mercantile success.  Its leader was Lord Keynes representing the UK Cabinet even though physically weakened by IE is infective (bacterial) endocarditis.  The infection of the endocardium -- heart inner lining -- or the heart valves causes inflammation and can be fatal. 
  . 
  
• The French wanted to be treated as in the primary tier. 
  
• The Mexicans wanted a silver backed currency. 
  
• No one was sure of the Soviet goals. 
  
• Bretton Woods resulted in the development is a phase during the operation of a CAS agent.  It allows for schematic strategies to be iteratively blended with environmental signals to solve the logistical issues of migrating newly built and transformed sub-agents.  That is needed to achieve the adult configuration of the agent and optimize it for the proximate environment.  Smiley includes examples of the developmental phase agents required in an emergent CAS.  In situations where parents invest in the growth and memetic learning of their offspring the schematic grab bag can support optimizations to develop models, structures and actions to construct an adept adult.  In humans, adolescence leverages neural plasticity, elder sibling advice and adult coaching to help prepare the deploying neuronal network and body to successfully compete. 
  of financial infrastructure and rules that worked: The IMF is the International Monetary Fund developed as part of the Bretton Woods agreements to provide liquidity to national gold denominated reserve banks at times of stress in the global financial network - a shortage of a particular currency which was inhibiting trade; in support of a broader Bretton Woods framework designed so as to ensure that currencies did not become misaligned with one another, and were a fair representation of what things were worth.  The IMF removed the need for nations to depend on private loans from commercial banks, such as Britain's dependence on J. P. Morgan during the 1920s and 30s.  The agreement required each Bretton Woods signatory to provide a capital investment or 'quota' into the fund which would subsequently correspond to the amount that the country could borrow from the fund in times of financial stress.  The top four countries and their quotas were set by IMF architect, Harry Dexter White, to match FDR's priorities:
  1. US - $2.9 billion, an amount the FDR administration could transfer from Exchange Stabilization Fund without any need to ask for Congress for funds. 
     
  2. UK - $1.45 billion
  3. USSR - slightly less than UK quota
  4. China - less than USSR. 
     
  , World Bank was setup as part of the Bretton Woods agreements, as the International Bank for Reconstruction and Development, to repair and reconstruct Europe after the Second World War and as the World Bank continues to provide reconstruction and development resources for projects in developing economies. It includes:
  • International Finance Corporation 
  ; but the result functioned differently to the plan. 
  
• By 1971 the rules had been totally abandoned.  The effects of the Vietnam War forced Richard Nixon to remove the peg between the US Dollar and Gold.  This introduced a time of variable exchange rates and fiat money.  The controls on money flows between countries were also removed.  The result was to allow:
• Increasing wealth is schematically useful information and its equivalent, schematically useful energy, to paraphrase Beinhocker.  It is useful because an agent has schematic strategies that can utilize the information or energy to extend or leverage control of the cognitive niche.    gap between rich and poor
• World dominated by the private finance industry
• Huge imbalances between creditor and debtor nations
  
• As of 2016 after the weakening of Bretton Woods's capital controls and the introduction of the euro currency:
  
• A single currency managed by the ECB is the European Central Bank.  It administers monetary policy for the euro area and supervises the euro area banks.  Its chartered goal is to maintain price stability in the euro area.  , a bank constrained to limit inflation and with little ability to backstop individual country's banks
  
• Within a currency union with no central authority to tax; this is in effect a virtual Gold Standard was a set of informal agreements between central banks:
  • To support operation of the global trade between nation states
    
  • To convert their local currency to gold at an agreed conversion rate when asked.  It was
    
  • Based on David Hume's price specie flow theory.  But in practice it suffered from a mismatch between:
    
  • An economy's changing situation
    
  • The rigid rules constraining central bankers and
    
  • The limited quantity of gold.  When America's economy expanded during the 1920s and gold flowed into the country, struggling European economies deflated to maintain currency parity with gold.  Economists such as Keynes argued it was more sensible to manage economies by responding to their situation within the global network. 
    
  . 
  
• The euro area, having been impacted by the 2008 financial crisis, is struggling with very similar problems to those post World War 1 financial issues:
• Collapse of a major debtor - Greece
• Deflation trapping Southern Europe
• German exports supercharged by the relative weakness of the currency
  

The Mount Washington 

The Bitter Peace

• The Peace of Versailles had failed:
• Onerous reparations leading to resentment.  The losers had no reason not to renege on the agreement as soon as possible.  Debts or reparations must match ability to pay or inflation will be generated.  The US is the United States of America.   wanted its European allies to repay the war loans.  Instead they felt Europe, and especially the UK is the United Kingdom of Great Britain and Northern Ireland.  , was trying to get more. 
  
• Collapse of the Gold Standard was a set of informal agreements between central banks:
  • To support operation of the global trade between nation states
    
  • To convert their local currency to gold at an agreed conversion rate when asked.  It was
    
  • Based on David Hume's price specie flow theory.  But in practice it suffered from a mismatch between:
    
  • An economy's changing situation
    
  • The rigid rules constraining central bankers and
    
  • The limited quantity of gold.  When America's economy expanded during the 1920s and gold flowed into the country, struggling European economies deflated to maintain currency parity with gold.  Economists such as Keynes argued it was more sensible to manage economies by responding to their situation within the global network. 
    
  had not been addressed
• US Congress ensured the League of Nations was irrelevant.  This led to
  
• Hyper-inflation in Austria and Germany 
• European economic is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.   collapse
• Trade wars
  
• The great depression and
• Inducing a further world war.  This unfortunate scenario had been predicted by Lord Keynes in his 1919 masterpiece 'The economic consequences of the peace.'  

A short history of Gold

Economic consequences

• Country should set economic policy for domestic reasons -- not the Gold Standard
• Deflation must be avoided at all costs

• The US demanded repayment from France and Britain for its war loans. 
  
• The UK agreed to pay back 80 cents on the dollar. 
  
• France and the UK sucked $2 billion out of Germany. 
  
• France clamped down on its money supply after the war ended stopping its economic inflation.  It did not move back onto the Gold Standard and was attacked by speculators who took money out of France and overturned five governments.  The French responded by invading the Ruhr in 1923 seeking reparations to strengthen their economy.  US intervention in 1924 (Dawes Plan of 1924 was developed to resolve the crushing World War 1 reparations problem.  It was proposed by the US Dawes Committee with UK negotiator Lord Stamp.  It provided for an end to the Allied occupation of the Ruhr, and phased payments by Germany.  The plan proved unworkable and was replaced in 1929 by the Young Plan. 
  ) and 1929 (Young Plan of 1929 was developed by Owen Young, creator and chairman of Radio Corporation of America (RCA), J.P. Morgan and Thomas Lamont.  Young had been a developer of the Dawes Plan.  The Young Plan called for:
  • Reduced further payments by Germany by 20%
  • Divided the annual payment of $473 million into two parts - one unconditional for one third of the sum and the other two thirds postponable but incurring interest and financed by a consortium of American investment banks led by J.P. Morgan.  The 1929 Wall Street crash removed this financing stream. 
    
  • Reparations transfers through the BIS.  
  ) tried to reduce the reparations burden. 
  
• In contrast Germany kept printing money to inflate away its debts. Hyperinflation resulted and was only stopped in 1923 when Schacht cancelled the currency is legal tender which provides no interest payments to the holder.  It is a central aspect of money and in CAS is an analog of a short term potential energy token such as the high energy phosphate bond of the base ATP.  But the interaction of the geometric breeding and deaths of agents that perform actions and the linear increase in real resources, described by Turchin, results in the correspondence between energy and currency being complex and adaptive. 
  and put Germany back on Gold. 
  
• By 1926 France settled with the US paying back 40 cents on the dollar.  

• Labor
• Stock
• Stocks
• Farms
• Real estate

• Write off debts
• Fund public works
• Pump cash into the economy is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.  

Lunatic Proposals

• A clearing house situated in Berlin. 
• Fixed conversion rates for currencies is legal tender which provides no interest payments to the holder.  It is a central aspect of money and in CAS is an analog of a short term potential energy token such as the high energy phosphate bond of the base ATP.  But the interaction of the geometric breeding and deaths of agents that perform actions and the linear increase in real resources, described by Turchin, results in the correspondence between energy and currency being complex and adaptive. 
  . 
  
• Barter between internal and external networks ensuring balanced trade. 
  

• Removed gold
• Placed controls on capital flows
• Managed balances on current accounts
  

• Get reelected
• Remove the constraints of the Johnson of 1934 prohibited American citizens from lending money to foreign countries that had not paid their past war debts.  It is still on the statute. 
  and Neutrality Acts of 1935, 1936, 1937 and 1939 were designed to support an isolationist policy by the US.  The policy was replaced by lend-lease. 
  . 
  
• Make UK situation acceptable to US voters and legislators.  Morgenthau insisted the UK sold its US assets prior to the US lending it more cash.  Churchill wrote a letter to FDR explaining that Britain could not pay for needed arms.  With FDR's invention of Lend-lease included a preliminary agreement and the act. 
  
  • Agreement included 8 articles:
  1. The US agreed to supply defense articles services and information as the President authorizes. 
     
  2. The UK will contribute to the defense of the US providing such articles it is in a position to supply.  
  • This resulted in the transfer of a cavity magnetron, the designs of the VT fuze and Whittle jet engine and the description of the feasibility of the A bomb.  As well as designs of rockets, superchargers, gyroscopic gunsights, submarine detection devices, self-sealing fuel tanks and plastic explosives. 
    
  3. UK can not transfer title of the goods and services without permission of the President. 
     
  4. Patent protected articles and information will be paid by the UK government when requested to do so by the President. 
     
  5. At the end of the emergency the UK government will return articles and information that has not been destroyed or used as requested by the President. 
     
  6. In assessing the articles to be returned the US will take into account articles already transferred to the US and accepted/acknowledged by the President. 
     
  7. The final benefits provided by the UK to the US in return for the aid will include:
  • No burden to commerce between the two countries
  • Promotion of mutually advantageous economic relations
  • Betterment of world-wide economic relations
  • Elimination of all forms of discriminatory treatment in international commerce
  • Reduction of tariffs and other trade barriers. 
    
  • Conversations to be held to determine in the light of governing economic conditions, the best means of attaining the objectives. 
    
  8. Agreement to take effect immediately.
     
  • Act to Promote the Defense of the United States, of March 1941 which superseded the neutrality acts. 
    
  the US committed informally to the conflict. 
  

Bedlam 1941-44

1. Stabilize foreign exchange rates - via a stabilization fund which became White's main focus. 
   
2. Setup an agency to rebuild the world economy is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.   after the war.  A bank to support reconstruction and redevelopment. 
   

• Mead and Robbins White Paper on Employment
• Beveridge's plan for a Welfare State

• Compulsory adjustments for debtor nations
• Voluntary adjustments for creditor nations

1. A decoy proposal which made adjustments compulsory for both creditor and debtor based on barter.  Every country had to develop bilateral agreements with all trading partners ensuring compensating trade flows.  The Bank of England liked this strategy since it protected the sterling zone. 
   
2. The real proposal of a clearing union.  This included:
• Central bank with its own currency is legal tender which provides no interest payments to the holder.  It is a central aspect of money and in CAS is an analog of a short term potential energy token such as the high energy phosphate bond of the base ATP.  But the interaction of the geometric breeding and deaths of agents that perform actions and the linear increase in real resources, described by Turchin, results in the correspondence between energy and currency being complex and adaptive. 
  (bancor) which is freely converted at a fixed rate to all other currencies. 
  
• All countries to have an account with the central bank
• Debtors develop overdrafts.  The central bank would charge fees to push the country back into balance.  If the debt persisted the country would become a deficiency country and would be able to depreciate its currency by a limited amount. 
  
• Creditors would also be charged to encourage flows to become balanced.  Gold would be retired since it would not be convertible from bancor.   
• No capital would be needed to fund the union since the charges would allow the infrastructure to operate at a profit.   Keynes used the profits to fund a global police force and an organization to provide economic is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.   relief and development aid. 
  

• A lasting economic framework that would stop another Great Depression and third war. 
• Not being based on a Gold Standard was a set of informal agreements between central banks:
  • To support operation of the global trade between nation states
    
  • To convert their local currency to gold at an agreed conversion rate when asked.  It was
    
  • Based on David Hume's price specie flow theory.  But in practice it suffered from a mismatch between:
    
  • An economy's changing situation
    
  • The rigid rules constraining central bankers and
    
  • The limited quantity of gold.  When America's economy expanded during the 1920s and gold flowed into the country, struggling European economies deflated to maintain currency parity with gold.  Economists such as Keynes argued it was more sensible to manage economies by responding to their situation within the global network. 
    
  due to its deflationary properties.  
• Avoiding floating exchange rates with their risks of hot money flows.  Instead focusing on something in between. 
  

• Fixed exchange rates
• Central coordination mechanism/organization to discipline economies that were out of step with exchange rates.  
• Constraints on hot money

• Fund's size - which was too small according to Keynes.  The US agreed to double its size. 
  
• Countries were required to invest upfront which would be difficult for the UK. 
  
• Exchange rate changes were controlled by the US which the UK feared. 
  

• More power to the members of the fund
• Reducing the amount of gold that had to be given to the fund
• An international currency.  White could not see any viable currency but gold backed dollars.  
• A meeting between the UK and US in Washington in the autumn of 1943 to leverage the pragmatism of war time to gain agreement to an economically valid plan - with workable solutions to the initial goals. 

Snake Bite Party

1. Deal must be sealed by the Democratic convention
2. Deal must not look like a fait-a-comp-lit to the participants or Congress. 
   

• The IMF be setup to lend in any currency is legal tender which provides no interest payments to the holder.  It is a central aspect of money and in CAS is an analog of a short term potential energy token such as the high energy phosphate bond of the base ATP.  But the interaction of the geometric breeding and deaths of agents that perform actions and the linear increase in real resources, described by Turchin, results in the correspondence between energy and currency being complex and adaptive. 
  when needed. 
  
• And it was to have the authority to stop competitive devaluations.  This would likely hurt the UK in its highly indebted state.  Keynes also backed fixed exchange rates, but the UK was split on this with Robbins arguing for floating rates.  
  
• The US agreed to a scarce currency clause if the world was short of dollars. 
  
• Only the US dollar was tied to gold.  This was practicable in the 1940s since the US had such large gold reserves. 
  
• Governments could control the flows of capital through bank regulators and limits on cash for travelers. 
  
• The IMF could prevent governments from devaluing their exchange rates.  This was unacceptable to the UK after their experiences in the 1920s. 
• The headquarters of the institutions was to be in Washington D.C.  The UK wanted at least one to be based in Europe. 
  

Babel on Wheels June 1944

• Establishment of the fund is the International Monetary Fund developed as part of the Bretton Woods agreements to provide liquidity to national gold denominated reserve banks at times of stress in the global financial network - a shortage of a particular currency which was inhibiting trade; in support of a broader Bretton Woods framework designed so as to ensure that currencies did not become misaligned with one another, and were a fair representation of what things were worth.  The IMF removed the need for nations to depend on private loans from commercial banks, such as Britain's dependence on J. P. Morgan during the 1920s and 30s.  The agreement required each Bretton Woods signatory to provide a capital investment or 'quota' into the fund which would subsequently correspond to the amount that the country could borrow from the fund in times of financial stress.  The top four countries and their quotas were set by IMF architect, Harry Dexter White, to match FDR's priorities:
  1. US - $2.9 billion, an amount the FDR administration could transfer from Exchange Stabilization Fund without any need to ask for Congress for funds. 
     
  2. UK - $1.45 billion
  3. USSR - slightly less than UK quota
  4. China - less than USSR. 
     
  
  
• Organization and management
• Operations of the fund
• Purposes, policies and subscriptions

The Summit: week one

• China would demand to be fourth
• France will require 5th place but so will India
• Latin American countries were important to the US is the United States of America.   since they could backstop any contested US vote at Bretton Woods. 
  

1. The IMF is the International Monetary Fund developed as part of the Bretton Woods agreements to provide liquidity to national gold denominated reserve banks at times of stress in the global financial network - a shortage of a particular currency which was inhibiting trade; in support of a broader Bretton Woods framework designed so as to ensure that currencies did not become misaligned with one another, and were a fair representation of what things were worth.  The IMF removed the need for nations to depend on private loans from commercial banks, such as Britain's dependence on J. P. Morgan during the 1920s and 30s.  The agreement required each Bretton Woods signatory to provide a capital investment or 'quota' into the fund which would subsequently correspond to the amount that the country could borrow from the fund in times of financial stress.  The top four countries and their quotas were set by IMF architect, Harry Dexter White, to match FDR's priorities:
   1. US - $2.9 billion, an amount the FDR administration could transfer from Exchange Stabilization Fund without any need to ask for Congress for funds. 
      
   2. UK - $1.45 billion
   3. USSR - slightly less than UK quota
   4. China - less than USSR. 
      
   commission.  White chaired this commission.  It had four main committees:
1. Quotas.  The French were livid with their allocation.  White had an additional $800 million for sweetening the disappointed but it took a promise from Morgenthau, that the French would become one of the five directors of the IMF to calm Mendes France.  The USSR is the Union of Soviet Socialist Republics. 
   was given a larger quota than their economy is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.   currently justified.  This was in-line with FDR's view of their future importance and his desire to partner with both them and the Chinese.  But whatever the US is the United States of America.   offered, the USSR demanded more!  Was the USSR being secretly coached by White?
   
2. How the fund would operate
3. How it would be managed
4. Legal status is a publically accepted, signal that one possesses assets: wealth, beauty, talent, expertise, access & trust of powerful people; to be able to help others. 
   and form.  There was also a standing committee that would sweep up loose ends later on each day. 
   
2. The World Bank was setup as part of the Bretton Woods agreements, as the International Bank for Reconstruction and Development, to repair and reconstruct Europe after the Second World War and as the World Bank continues to provide reconstruction and development resources for projects in developing economies. It includes:
   • International Finance Corporation 
   commission.  Keynes chaired this commission.  The pressure soon undermined his already weakened heart is infective (bacterial) endocarditis.  The infection of the endocardium -- heart inner lining -- or the heart valves causes inflammation and can be fatal. 
   . 
   
3. Other means of international financial cooperation.  This was used to catch problems that White and Keynes wished to avoid: Silver, Future of the BIS is the Bank for International Settlements based in Basel, Switzerland.  It was initially setup to manage Germany's war reparations payments. 
   .  
• The Latin Americans being useful to the US position were able to obtain an IMF clause from White allowing "coconuts, or silver" to be used as collatoral by the IMF.  But the clause has never been executed. 
  

The Summit: week two

• A five year transition was added to IMF membership. 
  
• Countries were allowed some leeway to devalue without IMF constraints.  But these changes undermined the goals of the Bretton Woods agreement.  

• The World Bank was allowed to provide development is a phase during the operation of a CAS agent.  It allows for schematic strategies to be iteratively blended with environmental signals to solve the logistical issues of migrating newly built and transformed sub-agents.  That is needed to achieve the adult configuration of the agent and optimize it for the proximate environment.  Smiley includes examples of the developmental phase agents required in an emergent CAS.  In situations where parents invest in the growth and memetic learning of their offspring the schematic grab bag can support optimizations to develop models, structures and actions to construct an adept adult.  In humans, adolescence leverages neural plasticity, elder sibling advice and adult coaching to help prepare the deploying neuronal network and body to successfully compete. 
  assistance.  
• The Latin Americans obtained votes and seats on the IMF and World Bank boards.  

The Summit: week three

• The BIS was associated with New York and London bankers who were enemies of the IMF.  

Unmitigated Evil

• He got $655 million extra from the Canadians. 
  
• He got $2.8 billion of military aid from the US. 
  
• He got $2.6 billion of civilian aid from the US.  But the war in Europe continued for another year using up these resources and Keynes had not succeeded in extending Lend-lease included a preliminary agreement and the act. 
  
  • Agreement included 8 articles:
  1. The US agreed to supply defense articles services and information as the President authorizes. 
     
  2. The UK will contribute to the defense of the US providing such articles it is in a position to supply.  
  • This resulted in the transfer of a cavity magnetron, the designs of the VT fuze and Whittle jet engine and the description of the feasibility of the A bomb.  As well as designs of rockets, superchargers, gyroscopic gunsights, submarine detection devices, self-sealing fuel tanks and plastic explosives. 
    
  3. UK can not transfer title of the goods and services without permission of the President. 
     
  4. Patent protected articles and information will be paid by the UK government when requested to do so by the President. 
     
  5. At the end of the emergency the UK government will return articles and information that has not been destroyed or used as requested by the President. 
     
  6. In assessing the articles to be returned the US will take into account articles already transferred to the US and accepted/acknowledged by the President. 
     
  7. The final benefits provided by the UK to the US in return for the aid will include:
  • No burden to commerce between the two countries
  • Promotion of mutually advantageous economic relations
  • Betterment of world-wide economic relations
  • Elimination of all forms of discriminatory treatment in international commerce
  • Reduction of tariffs and other trade barriers. 
    
  • Conversations to be held to determine in the light of governing economic conditions, the best means of attaining the objectives. 
    
  8. Agreement to take effect immediately.
     
  • Act to Promote the Defense of the United States, of March 1941 which superseded the neutrality acts. 
    
  .  Once the Japanese surrendered the funding collapsed. 
  

• FDR is President Franklin Delano Roosevelt.  He is notable for his contributions to the US CAS:
  • New Deal strategies including:
  • SSA
    
  • FFDCA 
  • IRC
    
  • Lend-lease which pushed the US and Japan into World War 2 and helped the US to become the world's predominant military power.  
  • Bretton Woods's agreement which economically constrained any politically driven collapse of the world economy after the war and helped the US to become the world's predominant economic power.  
  wished to punish Germany.  Morgenthau and White became fixated on a plan to stop Germany from ever re-industrializing.  Keynes could not accept this logic but needed the backing of the US Treasury is the department of the treasury.  it is a federal government executive department created by Act of Congress in 1789 to manage government revenue.  The Secretary of the Treasury is a Cabinet officer.  To support funding of high cost investments: Disaster recovery, Wars, Famines; the treasury can issue debt instruments and manage the national debt. 
  .  Then
  
• FDR died and the Truman administration was much less friendly to the UK is the United Kingdom of Great Britain and Northern Ireland.  . 
  

Starvation Corner

• Shortages for the disconnected groups of:
• Information
• Food
• Stress is a multi-faceted condition reflecting high cortisol levels.  Dr. Robert Sapolsky's studies of baboons indicate that stress helps build readiness for fight or flight.  As these actions occur the levels of cortisol return to the baseline rate.  A stressor is anything that disrupts the regular homeostatic balance.  The stress response is the array of neural and endocrine changes that occur to respond effectively to the crisis and reestablish homeostasis. 
  
  • The short term response to the stressor
    
  • activates the amygdala which: Stimulates the brain stem resulting in inhibition of the parasympathetic nervous system and activation of the sympathetic nervous system with the hormones epinephrine and norepinephrine deployed around the body, Activates the PVN which generates a cascade resulting in glucocorticoid secretion to: get energy to the muscles with increased blood pressure for a powerful response.  The brain's acuity and cognition are stimulated.  The immune system is stimulated with beta-endorphin and repair activities curtail.  But when the stressor is
    
  • long term: loneliness, debt; and no action is necessary, or possible, long term damage ensues.  Damage from such stress may only occur in specific situations: Nuclear families coping with parents moving in.  Sustained stress provides an evolved amplifier of a position of dominance and status.  It is a strategy in female aggression used to limit reproductive competition.  Sustained stress:
    
  • Stops the frontal cortex from ensuring we do the harder thing, instead substituting amplification of the individual's propensity for risk-taking and impairing risk assessment! 
    
  • Activates the integration between the thalamus and amygdala. 
    
  • Acts differently on the amygdala in comparison to the frontal cortex and hippocampus: Stress strengthens the integration between the Amygdala and the hippocampus, making the hippocampus fearful. 
    
  • BLA & BNST respond with increased BDNF levels and expanded dendrites persistently increasing anxiety and fear conditioning. 
    
  • Makes it easier to learn a fear association and to consolidate it into long-term memory.  Sustained stress makes it harder to unlearn fear by making the prefrontal cortex inhibit the BLA from learning to break the fear association and weakening the prefrontal cortex's hold over the amygdala.  And glucocorticoids decrease activation of the medial prefrontal cortex during processing of emotional faces.  Accuracy of assessing emotions from faces suffers.  A terrified rat generating lots of glucocorticoids will cause dendrites in the hippocampus to atrophy but when it generates the same amount from excitement of running on a wheel the dendrites expand.  The activation of the amygdala seems to determine how the hippocampus responds. 
    
  • Depletes the nucleus accumbens of dopamine biasing rats toward social subordination and biasing humans toward depression. 
    
  • Disrupts working memory by amplifying norepinephrine signalling in the prefrontal cortex and amygdala to prefrontal cortex signalling until they become destructive.  It also desynchronizes activation in different frontal lobe regions impacting shifting of attention. 
    
  • During depression, stress inhibits dopamine signalling. 
    
  • Strategies for stress reduction include: Mindfulness. 
    
  for the survivors of the 36 million European dead which included:
• 1 in 5 Poles
• 1 in 11 Russians
• 1 in 12 Greeks
• 1 in 15 Germans
• 1 in 77 French
• 1 in 125 British
• The UK is the United Kingdom of Great Britain and Northern Ireland.   had only 3 or 4 years to solve its economic is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.   problems or it would collapse.  But the newly elected Labour government was not trusted and distrust are evolved responses to sham emotions.  During a friendship where no sham emotions have been detected trust will build up. 
  by the US leadership aims to develop plans and strategies which ensure effective coordination to improve the common good of the in-group.  John Adair developed a leadership methodology based on the three-circles model. 
  and most US citizens did not wish to give more loans to the UK. 
  

1. Austerity - retreat into a Sterling area which Keynes dismissed as isolation from the World economy and dependent on the cooperation of the dominions which was highly unlikely. 
   
2. Temptation - Accepting a large costly loan from the US. 
   
3. Justice - Keynes preferred option of demanding a gift of $3 billion from the US and then leveraging a very low interest loan of $5 billion justified by the heavy impact of war on the UK and a promise to accelerate the implementation of free trade within a year.  Once again this illustrated Keynes misunderstanding of the US political process.  And the politically savvy Chancellor Dalton was happy to leave the responsibility for failure with Keynes. 
   

• Implement social security
  
• Implement the National Health Service
  
• Nationalize much of the infrastructure and industry of the UK. 
  

Onward Christian Soldiers

• Vinson had purged the 'New Deal was FDR's political platform to help the poor, support the economy and reform the banking system.  The architects included Henry Morgenthau, Harry Hopkins, and Frances Perkins.  It:
  
  • Included liberal legislation: Emergency Banking Relief Act, Banking Act, SSA, Securities Act, Securities Exchange Act, National Housing Act, NIRA, National Labor Relations Act, FLSA, RTAA, Wealth Tax Act;
    
  • Presidential executive orders,
    
  • Enhanced the role of federal government in promoting economic growth with programs supporting:
    
  • Reformed trade policy with the RTAA. 
    
  • Blocked deflation by limiting economic competition with the NRA. 
    
  • Rural standard of living through electrification with the REA and TVA.  
  • Reduced unemployment with the WPA and CCC.  
  • Made taxation progressive through the Wealth Tax Act, capturing private wealth and allowing income to flow to the emergent middle class. 
    
  ' contingent from the treasury and had pushed White into limbo.  And White was being investigated by the FBI is Federal Bureau of Investigation. 
  as a Soviet spy.  So it was unlikely Vinson would have proposed White for the lead position at the IMF is the International Monetary Fund developed as part of the Bretton Woods agreements to provide liquidity to national gold denominated reserve banks at times of stress in the global financial network - a shortage of a particular currency which was inhibiting trade; in support of a broader Bretton Woods framework designed so as to ensure that currencies did not become misaligned with one another, and were a fair representation of what things were worth.  The IMF removed the need for nations to depend on private loans from commercial banks, such as Britain's dependence on J. P. Morgan during the 1920s and 30s.  The agreement required each Bretton Woods signatory to provide a capital investment or 'quota' into the fund which would subsequently correspond to the amount that the country could borrow from the fund in times of financial stress.  The top four countries and their quotas were set by IMF architect, Harry Dexter White, to match FDR's priorities:
  1. US - $2.9 billion, an amount the FDR administration could transfer from Exchange Stabilization Fund without any need to ask for Congress for funds. 
     
  2. UK - $1.45 billion
  3. USSR - slightly less than UK quota
  4. China - less than USSR. 
     
  .  Indeed
• Vinson had listened to the ABA is the:
  
  • American Bankers Association.  
  • American Board of Anesthesiology. 
  arguments and viewed the IMF as flawed.  He made Belgian Camille Gutt the first managing director.  He and the ABA were more interested in parochial leverage of the World Bank was setup as part of the Bretton Woods agreements, as the International Bank for Reconstruction and Development, to repair and reconstruct Europe after the Second World War and as the World Bank continues to provide reconstruction and development resources for projects in developing economies. It includes:
  • International Finance Corporation 
  and he made financier Eugene Mayer its first president. 
  
• Vinson insisted on paying the directors of the new organizations very high salaries.  This helped ensure the potential set of candidates would back his positions. 
  
• The US was judged a tyrant forcing through its desires and demonstrating its power. 
  
• Keynes was disappointed with Vinson's direction for Bretton Woods.  The stress is a multi-faceted condition reflecting high cortisol levels.  Dr. Robert Sapolsky's studies of baboons indicate that stress helps build readiness for fight or flight.  As these actions occur the levels of cortisol return to the baseline rate.  A stressor is anything that disrupts the regular homeostatic balance.  The stress response is the array of neural and endocrine changes that occur to respond effectively to the crisis and reestablish homeostasis. 
  
  • The short term response to the stressor
    
  • activates the amygdala which: Stimulates the brain stem resulting in inhibition of the parasympathetic nervous system and activation of the sympathetic nervous system with the hormones epinephrine and norepinephrine deployed around the body, Activates the PVN which generates a cascade resulting in glucocorticoid secretion to: get energy to the muscles with increased blood pressure for a powerful response.  The brain's acuity and cognition are stimulated.  The immune system is stimulated with beta-endorphin and repair activities curtail.  But when the stressor is
    
  • long term: loneliness, debt; and no action is necessary, or possible, long term damage ensues.  Damage from such stress may only occur in specific situations: Nuclear families coping with parents moving in.  Sustained stress provides an evolved amplifier of a position of dominance and status.  It is a strategy in female aggression used to limit reproductive competition.  Sustained stress:
    
  • Stops the frontal cortex from ensuring we do the harder thing, instead substituting amplification of the individual's propensity for risk-taking and impairing risk assessment! 
    
  • Activates the integration between the thalamus and amygdala. 
    
  • Acts differently on the amygdala in comparison to the frontal cortex and hippocampus: Stress strengthens the integration between the Amygdala and the hippocampus, making the hippocampus fearful. 
    
  • BLA & BNST respond with increased BDNF levels and expanded dendrites persistently increasing anxiety and fear conditioning. 
    
  • Makes it easier to learn a fear association and to consolidate it into long-term memory.  Sustained stress makes it harder to unlearn fear by making the prefrontal cortex inhibit the BLA from learning to break the fear association and weakening the prefrontal cortex's hold over the amygdala.  And glucocorticoids decrease activation of the medial prefrontal cortex during processing of emotional faces.  Accuracy of assessing emotions from faces suffers.  A terrified rat generating lots of glucocorticoids will cause dendrites in the hippocampus to atrophy but when it generates the same amount from excitement of running on a wheel the dendrites expand.  The activation of the amygdala seems to determine how the hippocampus responds. 
    
  • Depletes the nucleus accumbens of dopamine biasing rats toward social subordination and biasing humans toward depression. 
    
  • Disrupts working memory by amplifying norepinephrine signalling in the prefrontal cortex and amygdala to prefrontal cortex signalling until they become destructive.  It also desynchronizes activation in different frontal lobe regions impacting shifting of attention. 
    
  • During depression, stress inhibits dopamine signalling. 
    
  • Strategies for stress reduction include: Mindfulness. 
    
  of his arguments with Vinson initiated a series of heart attacks is an AMI. It can induce cardiac arrest.  Blocking the formation of clots with platelet aggregation inhibitors, can help with treating and avoiding AMI.  Risk factors include: taking NSAID pain killers (May 2017).  There is uncertainty about why AMI occur.  Alternative hypotheses include:
  
  • Plaques started to gather in the coronary arteries and grew until no blood flow was possible.  If this is true it makes sense to preventatively treat the buildup with angioplasty. 
    
  • Plaques form anywhere in the body due to atherosclerosis and then break up and get lodged in the coronary artery and start to clot.  If this is true it makes sense to preventatively limit the buildup of plaques with drugs like statins or PCSK9 inhibitors. 
    
  which resulted in his death in 1946 once he was back at home in Tilton. 
  

• A prospective loan from the World Bank to Poland was vetoed by the US.  
• The institutions were running out of money.  Vinson's high salaries consumed 65% of the budget.  White left the Truman administration. 
  

• He noted the $35 peg between the dollar and gold was too high.  He wrote that it should be $20 to stop the global economy is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.   from starving from a shortage of dollars. 
  
• He felt the design of Bretton Woods infrastructure was out of line with the split between the US and USSR.  He felt this demanded the introduction of an 'international medium of exchange' similar to Keynes's bancor plan.  

• Europe falling towards another depression
• Civil wars in China, Greece and Palestine.  The IMF had few resources to help. 
  

The Bretton Woods System

• White's quotas were far too small.  And none of the European economies could afford to invoke the IMF is the International Monetary Fund developed as part of the Bretton Woods agreements to provide liquidity to national gold denominated reserve banks at times of stress in the global financial network - a shortage of a particular currency which was inhibiting trade; in support of a broader Bretton Woods framework designed so as to ensure that currencies did not become misaligned with one another, and were a fair representation of what things were worth.  The IMF removed the need for nations to depend on private loans from commercial banks, such as Britain's dependence on J. P. Morgan during the 1920s and 30s.  The agreement required each Bretton Woods signatory to provide a capital investment or 'quota' into the fund which would subsequently correspond to the amount that the country could borrow from the fund in times of financial stress.  The top four countries and their quotas were set by IMF architect, Harry Dexter White, to match FDR's priorities:
  1. US - $2.9 billion, an amount the FDR administration could transfer from Exchange Stabilization Fund without any need to ask for Congress for funds. 
     
  2. UK - $1.45 billion
  3. USSR - slightly less than UK quota
  4. China - less than USSR. 
     
  .  And having seen the effect on the UK none wanted to either. 
  
• The US was inflating but the quota agreements were for fixed amounts so these were getting smaller in terms of purchasing power.  
• Eventually in 1950 the IMF tried to expand quotas 50%.  But World trade had doubled and countries resisted paying in the extra quota. 
  
• By 1961 the IMF introduced GAB is general agreements to borrow.  These allowed the rich nations, the G7, to lend their currencies to a struggling nation through the IMF, rather than use quotas.   contracts to ensure availability of extra capital. 
  

• Countries purchased dollars to bolster their foreign exchange reserves.  This encouraged the printing of more dollars than there was gold at the Bretton Woods peg of $35. 
  
• Kennedy (1961-63) and LBJ is President Lyndon Baines Johnson.   social programs (1963-69) and Vietnam War spending encouraged printing of ever more dollars. 
  
• The IMF is the International Monetary Fund developed as part of the Bretton Woods agreements to provide liquidity to national gold denominated reserve banks at times of stress in the global financial network - a shortage of a particular currency which was inhibiting trade; in support of a broader Bretton Woods framework designed so as to ensure that currencies did not become misaligned with one another, and were a fair representation of what things were worth.  The IMF removed the need for nations to depend on private loans from commercial banks, such as Britain's dependence on J. P. Morgan during the 1920s and 30s.  The agreement required each Bretton Woods signatory to provide a capital investment or 'quota' into the fund which would subsequently correspond to the amount that the country could borrow from the fund in times of financial stress.  The top four countries and their quotas were set by IMF architect, Harry Dexter White, to match FDR's priorities:
  1. US - $2.9 billion, an amount the FDR administration could transfer from Exchange Stabilization Fund without any need to ask for Congress for funds. 
     
  2. UK - $1.45 billion
  3. USSR - slightly less than UK quota
  4. China - less than USSR. 
     
  acted to offset the risk of over dependence on the dollar with the 1964 agreement to allow SDR is Special Drawing Right, a global reserve asset used by the IMF.  SDRs can be freely exchanged for usable currencies.  The SDR is associated with the current value of a basket of currencies.  In 1969 this basket included: US dollars, euros, Japanese yen and pound sterling.  In Oct 2016 the renminbi will be added to the basket. 
  s.  But the deployment was too slow to save the dollar from trouble. 
  
• The US was experiencing 7% inflation as Nixon became president in 1969.  Volcker warned him he had two years to save the dollar.  
• Capital controls had been undermined with countries obtaining dollars from London's Eurodollar market.  This allowed investor's money to flow away from the US. 
  
• Nixon, Treasury is the department of the treasury.  it is a federal government executive department created by Act of Congress in 1789 to manage government revenue.  The Secretary of the Treasury is a Cabinet officer.  To support funding of high cost investments: Disaster recovery, Wars, Famines; the treasury can issue debt instruments and manage the national debt. 
  Secretary Connally and Volcker aimed to strike back at what they saw as an attack on America. 
  
• Volcker led a working group to assess an effective dollar gold peg.  But Volcker concluded there was an imminent dollar crisis.  He suggested:
• Devaluing the dollar 15%
• Suspending convertibility with gold. 
  
• Germany allowed the deutschmark to float.  The Swiss, Dutch, Belgians and Austrians followed.  The UK and France were planning to convert dollars to gold. 
  
• Nixon moved:
• Used existing laws to avoid Congress while suspending convertibility to gold removing finance ministers and central banks main mechanism to maintain stable exchange rates. 
  
• Added import taxes and surcharges to force other countries to revalue their currencies is legal tender which provides no interest payments to the holder.  It is a central aspect of money and in CAS is an analog of a short term potential energy token such as the high energy phosphate bond of the base ATP.  But the interaction of the geometric breeding and deaths of agents that perform actions and the linear increase in real resources, described by Turchin, results in the correspondence between energy and currency being complex and adaptive. 
  . 
  
• Then the IMF was told.  The Federal Reserve of 1913 was a response to a series of banking panics with the goal of responding effectively to stresses.  It setup:
  • At least 8 and not more than 12 private regional Federal Reserve banks.  Twelve were setup
    
  • Federal Reserve Board with seven members to govern the system.  The President appointed the seven, which must be confirmed by Congress.  In 1935 the Board was renamed and restructured. 
    
  • Federal Advisory Committee with twelve members
  • Single US currency - the Federal Reserve Note. 
    
  chairman Arthur Burns was sidelined when he resisted the strategy. 
  
• The US then devalued but it did not fix the problem. 
  
• The Europeans announced they would remove their dollar pegs.  Bretton Woods was over. 
  

Epilogue

• World economic growth never rivalled
  
• Global GDP is:
  • Gross domestic product which measures the total of goods and services produced in a given year within the borders of a given country (output) according to Piketty.  Gordon argues to include products produced in the home & market-purchased goods and services, following Becker's theory of time use.  Gordon stresses innovation is the ultimate source of all growth in output per worker-hour.  GDP growth per person is equal to the growth in labor productivity + growth in hours worked per person.  GDP has many problems.  Gordon concludes that between 1870 and 1940 all available measures GDP is hugely understated because:
  • GDP is a poor measure of:
  • Value & wealth
    
  • Who gets what
  • Global supply chains
    
  • GDP excludes:
  • Reduction in infant mortality between 1890 (22%) and 1950 (1%)
    
  • Brightness & safety of electric light,
    
  • Increased variety of food including refrigeration transported fresh meat and processed food
  • Convenience and economies of scale of the department store and mail order catalog and resulting product price reductions
    
  • Services by house makers
  • Time & health gains from having flush toilets, integrated sewer networks; rather than having to physically remove effluent and cope with fecal-oral transmission
    
  • Leisure
  • Costs & benefits of different length work weeks
    
  • Speed and flexibility of motor vehicles - which were not included in the CPI until 1935, after the transformation had occurred.  And competition from improved foreign vehicles, while it provides purchaser/user with improved standard of living (less breakdowns, repairs, etc.) is measured as reduced domestic manufacture
    
  • Coercion and corruption to obtain resources 
  • Consumption impact of finite resources: coal, oil;
  • Destruction impact of loss of entire irreplaceable species
    
  • GDP includes items that should be excluded:
  • Cost of waste - cleaning up pollution (single use indestructible plastic bags), building prisons, commuting to work, and cars left parked most of the time; should be subtracted
    
  • Guanine-di-phosphate is a nucleotide base. 
    
  > 2.8%
  
• No global down turn
• Imbalances of current accounts were 3* smaller than during gold standard and smaller than more recent period. 
  

• Life expectancy is a measure of the average life time of a new born baby.  Without public health assistance many children die in the first five years of life significantly lowering the life expectancy of the whole group.  There are representational and data capture problems with the model:
  
  • Not knowing the risk of dying in the newborn's future, demographers use the risks present at that time to predict impacts in the future of the person.  No adjustment can be made for increased wellbeing. 
    
  • Saving the lives of children has a far larger effect on increasing life expectancy than extending the lives of the elderly
    
  • Impacts that occur in a particular year, such as a epidemic or pandemic, are treated as permanent effects for that years life expectancy even though they may be handled by public health strategies and hence be transients.  For life expectancy calculations in subsequent years the impact is ignored.  
  • Programs that reduced the impacts of infectious diseases, such as antibiotics and vaccine deployment, have reduced the variability of life expectancy following their introduction.  
  • Vital registration systems gather accurate data for life expectancy.  But most countries do not have the infrastructure and instead estimates are generated from demographic and health surveys. 
    
  increased.  
• Inequality decreased.  
• Increased provision of welfare systems. 
  
• Increased access to innovative tools.  
• Middle class gained access to: Motor cars, Air conditioners, Refrigerators and Automatic dish washers.  

• Collapsed economies is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.   were restarted by the Marshall Plan. 
  
• Devaluation was still dramatic and crisis driven
• Capital controls were undermined but provided stability to the central banks
• London helped countries get around the Bretton Woods capital constraints that aimed to stop flows of hot money.  
• Between 1800 and 1970 the combined London bank balance sheets represented less than half the UK total economic output with a return of less than 7%; by 2006 London banks' balance sheets were five times the value of UK economic output with a return of 20%
  
• Discredited central bankers managed the system informally.  They agreed swap lines are agreements between central banks to swap currencies so that they can provide required currencies to a partner bank needing additional currency.  For example a swap line provides access to additional currency when the partner is suffering a liquidity crisis. 
  for support of weak economies.  
• The system was dollar dependent which worked well until the US is the United States of America.   economy became stressed.  
• The US funded any area that became distressed or collapsed. 
  
• As the US faltered Bretton Woods failed. 
  

• Economies that used Keynesian spending no longer had the anti-inflation anchor of gold.  The spending resulted in both troubling inflation and stagnant output. 
  
• A variety of alternative models were tried to help manage the international money flows:
• Monetarism - by the US and UK; the UK still had more failures and requested an IMF bailout in 1976.  The Bundesbank promoted monetarism in 1974, which was subsequently adopted by the Thatcher government in 1979. 
  
• Currency boards
• Exchange rate mechanisms - Europe locked their currencies together in a 'snake is a fixed exchange rate mechanism which locks a set of currencies together.  It enables free flow of goods across the nations participating in the snake.  Examples include Bretton Woods and the ERM.  To operate over time it must:
  • Include a ratchet that allows currency flows from supplier to deficit nations, and forgives excessive debt burden, and thus
    
  • Allows trade to occur freely using the trader's currency. 
    
  ' that was called European Monetary Snake, ERM is the European exchange rate mechanism.  It was a monetary snake within the EMS to enable free trade of ECSC goods.  But it did not provide any ratchet to release the back pressure that builds up as goods flow from suppliers to deficit nations and currencies flow in reverse. 
  and eventually developed into the single euro currency union.  By the 1990s the UK had moved to join the ERM, in effect locking its economy with the German.  But the two economies differ in strategy and operation and with no hot money capital flow controls George Soros and other investors pulled money from the UK.  Under massive attack the UK along with Italy crashed out of the ERM and floated their currencies. 
  
• Inflation targeting - was subsequently adopted by the central banks.  The UK also freed its central bank from political control.  However, in the 2008 crisis inflation targeting provided no help. 
  

• The IMF is the International Monetary Fund developed as part of the Bretton Woods agreements to provide liquidity to national gold denominated reserve banks at times of stress in the global financial network - a shortage of a particular currency which was inhibiting trade; in support of a broader Bretton Woods framework designed so as to ensure that currencies did not become misaligned with one another, and were a fair representation of what things were worth.  The IMF removed the need for nations to depend on private loans from commercial banks, such as Britain's dependence on J. P. Morgan during the 1920s and 30s.  The agreement required each Bretton Woods signatory to provide a capital investment or 'quota' into the fund which would subsequently correspond to the amount that the country could borrow from the fund in times of financial stress.  The top four countries and their quotas were set by IMF architect, Harry Dexter White, to match FDR's priorities:
  1. US - $2.9 billion, an amount the FDR administration could transfer from Exchange Stabilization Fund without any need to ask for Congress for funds. 
     
  2. UK - $1.45 billion
  3. USSR - slightly less than UK quota
  4. China - less than USSR. 
     
  was catalytic in this extension of the US centered financial network.  Without its role as regulator of the Bretton Woods agreements the IMF transformed itself into an economic consultant and adviser with the power to bailout struggling countries. 
• And the collapse of communism made capitalism appear worth trying.  
• The IMF advocated the Washington Consensus:
• Liberalize the economy
• Open borders to trade
• Cut public spending
• Through the 1990s developing countries took the advice.  But then
  
• Asian countries suffered financial crises and needed IMF is the International Monetary Fund developed as part of the Bretton Woods agreements to provide liquidity to national gold denominated reserve banks at times of stress in the global financial network - a shortage of a particular currency which was inhibiting trade; in support of a broader Bretton Woods framework designed so as to ensure that currencies did not become misaligned with one another, and were a fair representation of what things were worth.  The IMF removed the need for nations to depend on private loans from commercial banks, such as Britain's dependence on J. P. Morgan during the 1920s and 30s.  The agreement required each Bretton Woods signatory to provide a capital investment or 'quota' into the fund which would subsequently correspond to the amount that the country could borrow from the fund in times of financial stress.  The top four countries and their quotas were set by IMF architect, Harry Dexter White, to match FDR's priorities:
  1. US - $2.9 billion, an amount the FDR administration could transfer from Exchange Stabilization Fund without any need to ask for Congress for funds. 
     
  2. UK - $1.45 billion
  3. USSR - slightly less than UK quota
  4. China - less than USSR. 
     
  bailouts including harsh conditions and increased levels of poverty.  Conway argues that this led the neighbors of these countries to avoid the IMF prescriptions and build local protections. 
  
• The Chinese banked the dollars they earned.  The volumes involved eventually affected the operation of the global system. 
  
• The US is the United States of America.   could issue lots of debt at low rates certain that the Chinese would buy. 
  
• The Chinese could sell cheap goods keeping inflation low across its customer base in the developed and developing world. 
  
• But without the Bretton Woods constraints the trade imbalances grew to enormous proportions.  In the US and UK liabilities grew.  US debt quadrupled from 1998 to 2008.  China, Japan and Germany's savings increased massively. 
  
• The result was lots of hot money searching for the highest rates of return.  A monetary bubble was induced.  Eventually in 2007 the interbank lending markets froze and by 2008 Lehman Brothers collapsed.  
• By 2009 the currency is legal tender which provides no interest payments to the holder.  It is a central aspect of money and in CAS is an analog of a short term potential energy token such as the high energy phosphate bond of the base ATP.  But the interaction of the geometric breeding and deaths of agents that perform actions and the linear increase in real resources, described by Turchin, results in the correspondence between energy and currency being complex and adaptive. 
  crisis had undermined the Euro zone. 
  

• Economists is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.   made intellectual mistakes
• Financial regulators made misjudgments
• Investors took missteps
• But he suggests the world's monetary system was mangled!  Governments were struggling with the same issues that were discussed at Bretton Woods:
• Without an anchor or mechanism to coordinate, some countries borrow too much and others lend too much. 
  
• That enabled the crisis as surpluses and deficits ballooned - demand collapsed and bond buyers stopped.
  
• Today the US is the United States of America.   takes the place the UK is the United Kingdom of Great Britain and Northern Ireland.   occupied at Bretton Woods.  Otherwise it's the same problem. 

• Plaza accord of 1985 when the Group of 5: France, West Germany, Japan, US is the United States of America.   and UK is the United Kingdom of Great Britain and Northern Ireland.  ; intervened in the currency is legal tender which provides no interest payments to the holder.  It is a central aspect of money and in CAS is an analog of a short term potential energy token such as the high energy phosphate bond of the base ATP.  But the interaction of the geometric breeding and deaths of agents that perform actions and the linear increase in real resources, described by Turchin, results in the correspondence between energy and currency being complex and adaptive. 
  markets. 
  
• 2008 IMF is the International Monetary Fund developed as part of the Bretton Woods agreements to provide liquidity to national gold denominated reserve banks at times of stress in the global financial network - a shortage of a particular currency which was inhibiting trade; in support of a broader Bretton Woods framework designed so as to ensure that currencies did not become misaligned with one another, and were a fair representation of what things were worth.  The IMF removed the need for nations to depend on private loans from commercial banks, such as Britain's dependence on J. P. Morgan during the 1920s and 30s.  The agreement required each Bretton Woods signatory to provide a capital investment or 'quota' into the fund which would subsequently correspond to the amount that the country could borrow from the fund in times of financial stress.  The top four countries and their quotas were set by IMF architect, Harry Dexter White, to match FDR's priorities:
  1. US - $2.9 billion, an amount the FDR administration could transfer from Exchange Stabilization Fund without any need to ask for Congress for funds. 
     
  2. UK - $1.45 billion
  3. USSR - slightly less than UK quota
  4. China - less than USSR. 
     
  meeting - agreed to rescue the banking system
  
• 2009 Group of 20 (G20) advanced economies is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.   Summit - committed to pump money into their economies.  But he suggests these summits are typically too late and the response is misplaced. 
  

• There is no vision of the form Keynes supplied.  
• No one wants to suffer the potential turmoil that could be unleashed. 
  

• It equates to the Gold Standard was a set of informal agreements between central banks:
  • To support operation of the global trade between nation states
    
  • To convert their local currency to gold at an agreed conversion rate when asked.  It was
    
  • Based on David Hume's price specie flow theory.  But in practice it suffered from a mismatch between:
    
  • An economy's changing situation
    
  • The rigid rules constraining central bankers and
    
  • The limited quantity of gold.  When America's economy expanded during the 1920s and gold flowed into the country, struggling European economies deflated to maintain currency parity with gold.  Economists such as Keynes argued it was more sensible to manage economies by responding to their situation within the global network. 
    
   
• No devaluations are possible by a eurozone is the group of countries within the EU that use the euro currency.  Economic decisions regarding the euro are centralized through the Eurogroup. 
  country
• No interest rate changes are possible
• The countries can't control capital flows across their borders
• They are forced to suffer deflation and recession to reach competitive parity with the other euro members.  
• The zone looked at freeing Greece but found it would have caused havoc. 
  

• White for the FBI investigations
• Keynes for problems with public spending during the 1970s and 1980s. 
  

• Conway's list of key rules and agreements obscures a key requirement.  A necessary aspect of Bretton Woods was to recirculate surpluses to the supplier countries as debt or capital when necessary (Marshall Plan).  This ratchet like mechanism is analogous to Deacon's autogenesis sustaining the far from equilibrium reduced local entropy of the CAS.  The process provides power to the creditors and allows the value system to continue operating.  It can be performed with the IMF is the International Monetary Fund developed as part of the Bretton Woods agreements to provide liquidity to national gold denominated reserve banks at times of stress in the global financial network - a shortage of a particular currency which was inhibiting trade; in support of a broader Bretton Woods framework designed so as to ensure that currencies did not become misaligned with one another, and were a fair representation of what things were worth.  The IMF removed the need for nations to depend on private loans from commercial banks, such as Britain's dependence on J. P. Morgan during the 1920s and 30s.  The agreement required each Bretton Woods signatory to provide a capital investment or 'quota' into the fund which would subsequently correspond to the amount that the country could borrow from the fund in times of financial stress.  The top four countries and their quotas were set by IMF architect, Harry Dexter White, to match FDR's priorities:
  1. US - $2.9 billion, an amount the FDR administration could transfer from Exchange Stabilization Fund without any need to ask for Congress for funds. 
     
  2. UK - $1.45 billion
  3. USSR - slightly less than UK quota
  4. China - less than USSR. 
     
  and the World Bank was setup as part of the Bretton Woods agreements, as the International Bank for Reconstruction and Development, to repair and reconstruct Europe after the Second World War and as the World Bank continues to provide reconstruction and development resources for projects in developing economies. It includes:
  • International Finance Corporation 
  but the point is that the requirement is essential to escape collapse (May 2016, June 2016). 
  
• The 20th century UK economy had emerged from the generalization of the
  Sven Beckert describes the historic transformation of the growing, spinning, weaving, manufacture of cotton goods and their trade over time.  He describes the rise of a first global commodity, its dependence on increasing: military power, returns for the control points in the value delivery system(VDS), availability of land and labor to work it including slaves. 
  
  He explains how cotton offered the opportunity for industrialization further amplifying the productive capacity of the VDS and the power of the control points.  This VDS was quickly copied.  The increased capacity of the industrialized cotton complex adaptive system (CAS) required more labor to operate the machines.  Beckert describes the innovative introduction of wages and the ways found to mobilize industrial labor. 
  
  Beckert describes the characteristics of the industrial cotton CAS which made it flexible enough to become globally interconnected.  Slavery made the production system so cost effective that all prior structures collapsed as they interconnected.  So when the US civil war blocked access to the major production nodes in the American Deep South the CAS began adapting. 
  
  Beckert describes the global reconstruction that occurred and the resulting destruction of the traditional ways of life in the global countryside.  This colonial expansion further enriched and empowered the 'western' nation states.  Beckert explains how other countries responded by copying the colonial strategies and creating the opportunities for future armed conflict among the original colonialists and the new upstarts. 
  
  Completing the adaptive shifts Beckert describes the advocates for industrialization in the colonized global south and how over time they joined the global cotton CAS disrupting the early western manufacturing nodes and creating the current global CAS dominated by merchants like Wal-Mart pulling goods through a network of clothing manufacturers, spinning and weaving factories, and growers competing with each other on cost. 
  
  Following our summary of Beckert's book, RSS comments from the perspective of CAS theory.  The transformation of disconnected peasant farmers, pastoral warriors and their lands into a supply chain for a highly profitable industrial CAS required the development over time: of military force, global transportation and communication networks, perception and representation control networks, capital stores and flows, models, rules, standards and markets; along with the support at key points of: barriers, disruption, and infrastructure and evolved amplifiers.  The emergent system demonstrates the powerful constraining influence of extended phenotypic alignment. 
  
  
  global cotton
  This page reviews the strategy of setting up an arms race.  At its core this strategy depends on being able to alter, or take advantage of an alteration in, the genome or equivalent.  The situation is illustrated with examples from biology, high tech and politics. 
  
  evolved amplifier to other goods.  The reorganization of the UK population into factory labor induced the legislators to extend the vote to these workers.  Empowered the workers expanded their pay and allowed other nations to compete. 
  
• Keynes idea of people hording money in depressions can be seen as symptomatic of inducing a CAS collapse.  The system and the network of agents, from which it emerges, must be maintained far from equilibrium to keep entropy's local effects minimized and the agents operating.  The depression places a barrier - feedback to every agent that they will spend less if they wait for prices to reduce further - starving the system of available energy.  
• Keynes's clearing union provides the economic is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.  
  This page discusses the effect of the network on the agents participating in a complex adaptive system (CAS).  Small world and scale free networks are considered. 
  
  network with the ratchet that CAS need to operate. 
  
• The UK parliamentary system assumed by Keynes to apply in the US is the United States of America.   is an
  This page discusses the mechanisms and effects of emergence underpinning any complex adaptive system (CAS).  Key research is reviewed. 
  
  emergent
  This page discusses the interdependence of perception and representation in a complex adaptive system (CAS).  Hofstadter and Mitchell's research with Copycat is reviewed. 
  
  perception, representation and control structure which requires ministers to be selected from the elected members of the house of commons and the members of the house of lords.  The ministers make law and policy and execute it through the civil service.  The constraints come from the: Electorate, Party, Members of parliament.  The
  Jonathan Powell describes how the government of, the former UK Prime Minister, Tony Blair, actually operated.  Powell was Blair's only chief of staff. 
  
  process is described by Jonathan Powell.  In contrast the US government separates the development of laws, the execution of policy and the constitutional and legal framework in which they operate and requires
  Barton Gellman details the strategies used by Vice President Cheney to align the global system with his economics, defense, and energy goals. 
  
  strategies influencing each branch to make things happen as described by Barton Gellman. 
  
• The penetration of the Imperial Preference
  Barriers are particular types of constraints on flows.  They can enforce separation of a network of agents allowing evolution to build diversity.  Examples of different types of barriers and their effects are described. 
  
  barriers and subsequent
  This page reviews Christensen's disruption of a complex adaptive system (CAS).  The mechanism is discussed with examples from biology and business. 
  
  disruption of the UK is the United Kingdom of Great Britain and Northern Ireland.   economic network by the US is the United States of America.   while obvious to Keynes was inevitable once the UK's military lead was lost and the UK economy had collapsed during the first world war.   The slew of technologies and centralized governmental organizations required by that war provided the US, Germany and Japan with superior weapons including carrier based aircraft, and battle tanks around which they developed transformational military strategies leveraged in the Second World War.  The UK's historic legacy and inter-war, self-inflicted economic bind left it unable or unwilling to leverage even its own strategic ideas.  
• Keynes transformation of the World Bank plan created an
  This page reviews the strategy of setting up an arms race.  At its core this strategy depends on being able to alter, or take advantage of an alteration in, the genome or equivalent.  The situation is illustrated with examples from biology, high tech and politics. 
  
  evolved amplifier with the Bretton Woods agreement providing the
  Plans emerge in complex adaptive systems (CAS) to provide the instructions that agents use to perform actions.  The component architecture and structure of the plans is reviewed. 
  
  schematic plan, and the offer of leveraged investment generating the reinforcing benefits to the private lender and hopefully the recipient.  
• CAS
  Plans are interpreted and implemented by agents.  This page discusses the properties of agents in a complex adaptive system (CAS). 
  It then presents examples of agents in different CAS.  The examples include a computer program where modeling and actions are performed by software agents.  These software agents are aggregates. 
  The participation of agents in flows is introduced and some implications of this are outlined. 
  
  agents leverage
  The agents in complex adaptive systems (CAS) must model their environment to respond effectively to it.  Samuel modeling is described as an approach. 
  
  models selected by
  This page reviews the implications of selection, variation and heredity in a complex adaptive system (CAS).  The mechanism and its emergence are discussed. 
  
  evolution or associated with local experience by learning.  Hence expertise in economics will not translate into other fields that need different
  This page discusses the interdependence of perception and representation in a complex adaptive system (CAS).  Hofstadter and Mitchell's research with Copycat is reviewed. 
  
  perceptions and representations.  Keynes repeated political naivety should have been assumed and managed by the UK leadership aims to develop plans and strategies which ensure effective coordination to improve the common good of the in-group.  John Adair developed a leadership methodology based on the three-circles model. 
  . 
  
• The initiation of US
  This page reviews Christensen's disruption of a complex adaptive system (CAS).  The mechanism is discussed with examples from biology and business. 
  
  network disruption by the strategically 'differentiated' economies of Japan and Germany exacerbated the
  This page reviews the inhibiting effect of the value delivery system on the expression of new phenotypic effects within an agent. 
  
  strategically miss-aligned spending on War and low investment regions of the US economy.  As a
  E. O. Wilson & Bert Holldobler illustrate how bundled cooperative strategies can take hold.  Various social insects have developed strategies which have allowed them to capture the most valuable available niches.  Like humans they invest in specialization and cooperate to subdue larger, well equipped competitors. 
  
  superorganism the US
  
• Must capture outsize profits from the most productive regions of its global network to sustain its relatively low strategic efficiency.  Without this reinvestment the middle class market within the US will shrink, analogously to what occurred in the UK throughout the 20th century. 
  
• Still can't ignore the constraints of its states intertwined economic strategies.  Hence the importance to the US of the TPP is the Trans Pacific Partnership, a twelve country, Pacific regional, trade deal between: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, Vietnam;  The U.S. aims to use the agreement to constrain competition from China.  The initial 12 countries account for more than a quarter of global seafood trade and a quarter of the World's timber and pulp production.  Five of the nations are among the World's most biologically diverse.  The TPP includes:
  • Patents and copyrights chapters. 
    
  • State-owned businesses chapter. 
    
  • Investor-state dispute settlement chapter which enforces extrajudicial tribunals for arbitrating disputes.  The tribunals give investors legal recourse if a government changes policies in ways that hurt the value of their investments. 
    
  • An environmental chapter that covers illegal wildlife trafficking, forestry management, overfishing and marine protection.  Environmentally destructive subsidies, such as cheap fuel for illegal fishing boats and subsidies for boat building in overfished waters are banned.  The chapter enforces Cites with economic sanctions and disallows trade in wildlife taken illegally from a country. 
    
  • Requirements that member countries strengthen port inspections and document checks. 
    
  • Requirements that a country in the agreement take action if they discover contraband that has been harvested illegally, even if the product is not illegal in that country. 
    
  . 
  
• The US response to London's financial success was described by Matt Taibbi and RSS provides a CAS analysis. 
  
• Social gains have been
  Deaton describes the wellbeing of people around the world today.  He explains the powerful benefit of public health strategies and the effect of growth in material wellbeing but also the corrosive effects of aid. 
  
  Following our summary of Deaton's arguments RSS comments from the perspective of complex adaptive system (CAS) theory.  The situation he describes is complex including powerful amplifiers, alignment and incentives that overlap broadly with other RSS summaries of adaptations of: The biosphere, Politics, Economics, Philosophy and Health care. 
  
  
  discussed in depth by Deaton.  The CAS framing and assessment of his arguments views the global network as
  This page reviews the inhibiting effect of the value delivery system on the expression of new phenotypic effects within an agent. 
  
  phenotypically aligned and
  This page reviews Christensen's disruption of a complex adaptive system (CAS).  The mechanism is discussed with examples from biology and business. 
  
  disrupted and suggests an escalating Machiavellian struggle complicates Deaton's conclusion of social progress.  
• The Asian financial crises were engineered by western financial architects
  Satyajit Das uses an Indonesian company's derivative trades to introduce us to the workings of the international derivatives system.  Das describes the components of the value delivery system and the key transactions.  He demonstrates how the system interacted with emerging economies expanding them, extracting profits and then moving on as the induced bubbles burst.  Following Das's key points the complex adaptive system (CAS) aspects are highlighted. 
  
  as described by Satyajit Das.  
• The US sub-prime housing crisis enabled by the low cost debt provided by the Chinese transformed into high rate debt targeted by hot money
  A key agent in the 1990 - 2008 housing expansion Countrywide is linked into the residential mortgage value delivery system (VDS) by Paul Muolo and Mathew Padilla.  But they show the VDS was full of amplifiers and control points.  With no one incented to apply the brakes the bubble grew and burst.  Following the summary of Muolo and Padilla's key points the complex adaptive system (CAS) aspects are highlighted. 
  
  is described by Muolo & Padilla.  
• For RSS the Plaza accord was where the US first demonstrated the use of global
  Charles Ferguson argues that the US power structure has become highly corrupt. 
  
  Ferguson identifies key events which contributed to the transformation:
  

  • Junk bonds, 
  • Derivative deregulation, 
  • CMOs, ABS and analyst fraud,
    
  • Financial network deregulation,
    
  • Financial network consolidation, 
  • Short term incentives
    

  Subsequently the George W. Bush administration used the situation to build a global bubble, which Wall Street leveraged.  The bursting of the bubble: managed by the Bush Administration and Bernanke Federal Reserve; was advantageous to some. 
  
  Ferguson concludes that the restructured and deregulated financial services industry is damaging to the American economy.  And it is supported by powerful, incentive aligned academics.   He sees the result being a rigged system. 
  
  Ferguson offers his proposals for change and offers hope that a charismatic young FDR will appear. 
  
  Following our summary of his arguments, RSS comments on them framed by complex adaptive system (CAS) theory.  Once the constraints are removed from CAS amplifiers, it becomes advantageous to leverage the increased flows.  And it is often relatively damaging not to participate.  Corruption and parasitism can become entrenched. 
  
  
  financial WMD; to push the Japanese economy into a depression it has yet to escape from. 
  

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