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Tuesday, April 01, 2008

Money and Security

Hubert Zimmermann, a German author, wrote Money and Security. Troops, Monetary Policy, and West Germany's Relations with the United States and Britain, 1950-1971 in English, even while focusing on a part of German history I had been embarassingly unaware of. I will not focus too much on it, as I plan on using it in my master thesis and an economics paper that I have to write.

Let it suffice to say that Zimmermann, shows in a very conscise and convincing manner how Germany came under pressure from the United States (and to a lesser extent Britain) because of the foreign exchange surplus that foreign troops in Germany created for the mark. Because these troops had to be paid in German money, Germany ran a balance-of-payments surplus for years on end (not only because of that though, but this was responsible for a large part of it).

The United States continously during the 1960s tried the German government to offset this deficit (for the US), succeeding increasingly less over the course of that decade. Highly interesting stuff, the foreign troops in Germany thus directly contributed to the end of the Bretton Woods system. Economy and security as two sides of one and the same coin. Read it. (I am too tired for better posts tonight, sorry)

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