George W. Bush's policy takes the USA to financial collapse

The current American deficit and its long-term financial obligations, if goes un-answered, will sooner or later lead to either a marked increasein interest rate or a substantial devaluation of dollar. On one hand, a substantial increase in interest rates will lead to a major recession in USA which will be felt immediately around the world. On the other hand, a substantial devaluation will cause financial chaos in the world. What is needed is to seriously reconsider the international role of the dollar as the world currency. In other words we need a new Bretton Woods Agreement.

At the end of the WWII 45 nations gathered at a United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire to address the problems of reconstruction, monetary stability and exchange rates.

The delegates agreed to establish an international monetary system of convertible currencies, fixed exchange rates and free trade. To facilitate these objectives the delegates agreed to create two international institutes: the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (the World Bank). An initial loan of $250 million to France in 1947 was the World Bank’s first act.

Since then there has already been considerable criticism of the roles of IMF and the World Bank. The above mentioned problems and the ongoing trade imbalance in the world have to be addressed by a similar gathering. Sooner or later, both the United States and the rest of the world have to address the existing problems. This problem is not United States alone. We can not ignore the largest economy on earth. It is said that if United States sneezes, the world catches cold. We have to either make sure that United States doesn’t catch cold or vaccinate ourselves against it.

Dr. Abbas Bakhtiar