The Age of Magic Money
Can Endless Spending Prevent Economic Calamity?
In June 1933, a thousand representatives from 66 countries gathered in London for the World Economic Conference -- the grandest collection of world leaders since the Paris Peace Conference of 1919. Among those attending were a king, eight prime ministers, 20 foreign ministers, and 80 other cabinet ministers and heads of central banks.
The global economy was still mired in a depression that had begun more than three years earlier. In the two countries hardest hit, Germany and the United States, unemployment was above 30 percent. The United Kingdom, the nations of the British Empire, and a handful of other European countries with close commercial ties to London had abandoned the gold standard in late 1931, leaving exchange-rate arrangements in complete disarray. Meanwhile, Germany, after a banking crisis in the summer of 1931, had suspended payments on most of its international debts and imposed severe currency and capital controls.
The purpose of the conference, originally conceived in the