IN OUR common narrative, the modern era of global finance—what we call the Old Order—begins with the Great Depression and New Deal of the 1930s. The economic model put in place by President Franklin D. Roosevelt and others at the end of World War II is seen as a political as well as economic break point. But arbitrarily selected demarcation points in any human timeline can be misleading. The purpose of narrative, after all, is to simplify the complex and, over time, to remake the past in today’s terms. As we approach any discussion of the Old Order, we must acknowledge that the image of intelligent design in public policy is largely an illusion.
There is no question that the world after 1950 was a reflection of the wants and needs of the United States, the victor in war and thus the designer of the peacetime system of commerce and finance that followed. Just as the Roman, Mongol and British empires did centuries earlier, America made the post–World War II peace in its own image. The U.S.-centric model enjoyed enormous success due to factors such as relatively low inflation, financial transactions that respect anonymity, an open court system and a relatively enlightened foreign policy—all unique attributes of the American system.
But the framework of the global financial system in the twentieth century and its U.S.-centric design were the end results of a series of terrible wars—starting, in the case of America, with the Civil War. The roots of the U.S.-centric financial order that arose at the end of World War II extend back into the nineteenth century and reflect the political response of a very young nation to acute problems of employment and economic growth—problems that remain unresolved today.