MONEY MELTDOWN

Shelton, whose 1989 audit of Kremlin finances (The Coming Soviet Crash) proved dead-on, here casts a cold eye on the increasingly fractious and risky state of the international monetary system. Notwithstanding the Cold War's end, the author warns, recurrent breakdowns in orderly currency relations could cost the global village its chance for sustained prosperity. In this cautionary context, she calls for a new cycle of self-controlled cooperation akin to that which prevailed during the two decades after WW II. Before presenting her own recommendations for renewal, however, Shelton offers a detailed, stage-setting survey of the West's efforts to get a firm grip on exchange rates from Bretton Woods through the petrodollar crisis and on to the contemporary era in which Europe's hopes for monetary union have yet to be realized. Citing nationalism as the gravest threat to the ties that bind trading partners in a peaceful world community, the author contrasts America's time-honored status as a champion of free markets and economic opportunity with the Clinton administration's attempts to gain advantage by manipulating exchange rates, browbeating commercial rivals, berating speculators, and otherwise throwing superpower weight around. What's needed to contain the preference of all governments for political expedience, she argues, is another Bretton Woods-like regime with gold as the universal standard of value to fix currency rates and ensure fiscal discipline and stability. If Shelton had her way, moreover, she would extend the barbarous relic's convertibility to private citizens (as a further means of guaranteeing honest counts from planet Earth's treasuries) and consign the IMF to history's dustbin. Capital analyses of how money makes the world go around, plus an agenda for restructuring an ad hoc order that's been overtaken by events.