Pat Buchanan

"Laissez-faire is finished, the all-powerful market that is always right, that's finished," said Nicholas Sarkozy, speaking ex cathedra, last month.

As a result, said the diminutive French president, it is "necessary to rebuild the entire global financial and monetary system from the bottom up, the way it was done at Bretton Woods after World War II."

Sarky's history is a bit off. The Bretton Woods Agreements were actually signed in July 1944, when German troops still occupied Paris, a month before France was liberated by the Americans, who let Charles de Gaulle and the Free French do the honors.

Our European friends seem positively giddy about this weekend's meeting in Washington, where they hope to impose upon us a new world economic order like the one we imposed in 1944.

We "must have a new Bretton Woods -- building a new financial architecture for the years ahead," says Gordon Brown, who is surely aware the first Bretton Woods was a British humiliation, with London yielding place and submitting to Washington's dictation.

Brown and Sarky will be here for what is being bailed as a historic gathering of the G-20, which consists of the G-7 -- the United States, Canada, Britain, France, Germany, Italy and Japan -- plus the BRIC four, the rising economic powers of Brazil, Russia, India and China, and other nine economic powers, like Saudi Arabia, South Korea and Mexico.

Yet, to call this a second Bretton Woods is absurd. At that Mount Washington Hotel gathering in New Hampshire, the United States, led by Treasury's Harry Dexter White, who doubled as a Soviet spy, dictated the terms under which the world economy was to operate.

The U.S. dollar, tied to gold, was to become the world's reserve currency. The pound, the franc and other currencies were to be tied to the dollar at fixed rates of exchange. An International Monetary Fund was established to lend to nations with balance of payments problems. An International Bank for Reconstruction and Development (World Bank) was created to provide loans for rebuilding war-torn Europe.

America provided most of the financing for the new institutions and assumed the lion's share of control. Though the most famous economist of the age, J.M. Keynes, led the British delegation, his ideas -- for a new world central bank and new world currency -- were brushed aside by Harry White and the Americans.

The Bretton Woods system endured until Richard Nixon. With his country hemorrhaging gold in 1971, Nixon slammed the gold window shut, cut the dollar loose and let it float against other currencies. Nixon's was an act of necessity. The Europeans, with more dollars than they needed or wanted, were coming to cash them in and clean out Fort Knox.

Pat Buchanan

Pat Buchanan is a founding editor of The American Conservative magazine, and the author of many books including State of Emergency: The Third World Invasion and Conquest of America .
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