Note the US was back on gold internationally after Bretton Woods:

The Bretton Woods Conference took place in July 1944, but did not become operative until 1959, when all the European currencies became convertible. Under this system, the IMF and the IBRD were established. The IMF was developed as a permanent international body. The summary of agreements states, “The nations should consult and agree on international monetary changes which affect each other. They should outlaw practices which are agreed to be harmful to world prosperity, and they should assist each other to overcome short-term exchange difficulties.” Wikipedia

So Ruml’s analysis didn’t apply until after 1971 when the US finally dropped convertibility.

Might be why Ruml’s points didn’t gain any traction back then.

5 Responses

  1. Warren:

    I think there was more political reasons for why Ruml’s points were ignored. He didn’t publish too much, could do more research, but it appears he was a stat guy (1940s quant). I speculate the massive WWII spending required someone at the NY Fed who was more of a technician than political actor. Ruml’s five or so years at the NY Fed handling the monetary transactions was probably an eye opener. Stat guys love to get into the nuts and bots of things. Ruml figures out how this works, he is basically a Hoover conservative (worked for Hoover for a while), wants to support domestic business and makes a speech to justify business tax cuts.

    His insight (for me) in that speech was not just that taxes aren’t needed to fund spending, but the shift in firm financing from equity to debt that policies encouraged. The tax on capital gains and the deductability of interest support the power shift from manufacturing to finance.

    After WWII, the plans were in place for dollar/reserve currency, an agreement for convertibility was required. So Ruml’s speech, while being domestic conservative anti-tax, were definitely not in line with global financial restructuring. He left the NY Fed in 1946 – his job was complete.

  2. Did you know about this?

    President Ronald Reagan created a commission to study government waste entitled: The President’s Private-Sector Survey On Cost Control, popularly known as the “Grace Commission,” named after its chairman, J. Peter Grace.

    In his opening letter to the president in volume one of the report, Chairman Grace revealed that “…all individual income tax revenues are gone before one nickel is spent on the services which taxpayers expect from their Government.”

  3. OT but it looks like tomorrow’s the day for Gov. Charlie Crist to pull the trigger on his independent Senate run in Florida. Warren’s political platform is exactly what Crist is missing but he doesn’t know it yet (unless, of course, Warren or Tom Nugent have gotten to him already). :o)

    But then Crist made a political calculation that backfired, choosing to embrace President Barack Obama — literally — and his $787 billion federal stimulus plan at a Fort Myers rally in February 2009. At the time, Obama’s poll numbers were high, and Crist hoped the stimulus money for state government could prevent tough budget decisions for him and the Legislature.

    Rubio used the image of “the hug” to his advantage. He hit rallies and events around the state criticizing the Obama agenda while Crist said little about the Senate race for months, focusing instead on raising money. Rubio’s conservative message about limited spending and relying on the free market rather than government to create jobs eventually caught on, first with tea party activists and then with mainstream Republicans.</b

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