The global monetary system should have been reformed a long time ago, because world trade is completely different today compared to after the Second World War. The dollar system that was set up at the time to restore world trade no longer fits its purpose and therefore it should be changed. That message was given by the American Minister of Economic Affairs, Wilbur Ross, during a panel discussion at the World Economic Forum.
He gave the following answer when asked who should take over the leading role of the United States, now that she no longer wants to fulfill that role:
It was deliberate American policy to restore Europe and Asia from the devastation of war. And that was undoubtedly good policy. It was a good policy worldwide and in those days. Until the 1970s we had surpluses on our trade balance. It was therefore an affordable policy choice. But one of the reasons why it went wrong was that we did not set a time limit on it. And that’s what I meant to say.
Concessions that were totally appropriate in to a European country such as Germany or to a country like China or Japan in 1945 is singularly inappropriate as we are now sitting here. So there was a timing factor and I do not want to blame the WTO or GATT for that. That was American policy and we screwed up.
President Trump made it very clear that he feels this was an important error historically in our policy decisions about trade. And now we are dealing with the cumulative effect of that’s what we are trying to deal with in a very short time.
According to Wilbur Ross, it was a rational choice right after World War Two to support the rest of the world with the dollar system, but the United States government made the mistake of not revising that policy in time. A multipolar world in which other countries can stand on their own feet requires a different approach.
That is my whole point in the history lesson. There was a good reason to do that, because the world was rampaged World War II. There is no longer a need to subsidize China, Japan or Europe with our money.
Below is the video of the panel discussion.