E Let Us Not Pervert Keynes’ Thought

In 1944, Keynes came to the Bretton Woods Conference to present his idea of the Bancor, a unit of account to be created by an International Authority to keep foreign exchange accounts always balanced so that trade could prosper among nations.

The co-convenor of the Conference, Harry Dexter White, had no ear for the Bancor. He was interested only in establishing the Dollar as the international reserve currency, a proposal that he was certain would be acceptable to the US Congress.

The idea of the Bancor has been kept in subdued conversation among economists. Until now. Currently, that idea appears to be the core of a proposal that is presumed to be implemented in a few days by the International Monetary Fund.

James Rickards, an insider consultant and financial writer, is warning that a "Global Financial Elite" has the support of the IMF to a plan to replace by December 31, 2019 the US currency with a new "Distributed Ledger System" using the IMF's "Special Drawing Rights" as a new "global reserve currency." This plan is a perversion of Keynes’ thought about the Bancor.

The Bancor was supposed to be a unit of account, with no implicit exchange value.


How to Set Things Right

With three clarifications, the spirit of the Bancor may be revivified. First, taking a leaf from experience rather than abstract theory, as it was finally incorporated into the IMF's "Special Drawing Rights" the Bancor would have exchange value, a value ultimately determined by international financial markets.

Second clarification is that the Bancor ought to be created by each national Central Bank, so that we would have the American Bancor, the Swiss Bancor, the Chinese Bancor, etc. Let us temporarily call it the xBancor. Today’s computers’ power will easily let us ascertain the value of each Bancor at each moment in time.

The third clarification is most important. Each national Bancor would have to be distributed in accordance with three rules developed within the context of Concordian monetary policy. The Bancor should be issued as a loan:

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Carmine Gorga, PhD, a former Fulbright Scholar, is president of The Somist Institute. His book, “The Economic Process,” ...

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