It means to me that the basis of the Western banking system for the past 60+ years has been founded on the industrial might of the US as the prime mover and investor.
Now that the US (and the UK) are in decline, and as China and India become the prime movers, plus also the terrible level of debt that the US and Britain has taken on, all that combined with dreadful (and daily worsening) balance of trade imbalance means that the institutions that emerged from the B/W conference are now themselves outdated and invalid, and worse yet, unfunded.
That means that the whole basis on which our currencies are set up is now invalid. The credit crunch isn’t a crunch, it’s that the transfer of debt between nations that has been behind all of the world trade for the past 30 + years has finally hit the buffers.
Where once balance of trade was reasonably just that, a balance of trade, since the early 70’s when the US was bankrupt and only bailed out by the adoption of the US dollar as THE energy currency, for the last 30 years things have slewed from a balance to a one sided transfer.
There will have to be a global shake up with an equivalent meeting driven by the new power houses to establish a go forward plan to replace that which the B/W conference set up.
My concern is if this will result in the US throwing a hissy-fit and declaring war on the debt holders to “maintain its currency” and / or to “secure” vital supplies.
Iraq may or may not have been all about oil, the next “adventure” that the US goes into certainly WILL be.
BTW – this is one of the few times that I think that Wikipedia is a better source than most to get the low-down on Bretton Woods.
Bretton Woods system - Wikipedia, the free encyclopedia