The Growth of American Power Through Cold and Hot Wars 297and established the dollar as a global currency. At first glance, these programs
seem to be complex but they addressed basic problems in a fundamental way
[and the IMF and World Bank are still with us, and still controversial, today]
and one need not possess a degree in economics to understand them.
They built the IMF to address problems of currency stabilization. The war
had obviously devastated the economies of Europe and Asia. Many countries
had run huge deficits to pay for war [like the U.S. in the early 21st century
in Iraq and Afghanistan has] and many suffered from inflation, along with
unemployment and a shortage of vital resources. Like any institution, or any
person, in desperate straights, the damaged countries needed money, and
people go to banks to get money [just as the Americans have borrowed so
much money from China in the past few years], so the IMF became a lender
to nations that needed capital or needed to fix their currencies. The IMF
would infuse a nation with capital–which is money used for productive pur-
poses, money used to develop more economic activity, not simply cash to put
into storage–so that it could recover from the war, reduce inflation, or be able
to borrow and lend in the international banking world. The World Bank was
somewhat similar, but dealt with the physical reconstruction and development
of countries in need. Those nations that had fought in World War II had suf-
fered enormously and needed help in rebuilding. The World Bank would
make funds available to nations to reconstruct their infrastructure–highways,
bridges, communications networks, health and education systems, and other
areas–after it had been destroyed in the war. It could also provide funds for
smaller, developing, countries that had not yet industrialized but that wanted
to modernize, or develop their own infrastructure like the established coun-
tries already had.
These programs, however, had a specific purpose and came with strings
attached. To receive IMF or World Bank aid, a country had to have a priva-
tized economy–meaning that the key industries were owned by private indi-
viduals, not the state. State, or public, ownership of factories, communications,
or other key industries would be considered Socialist, and the point of the
Bretton Woods System was to prevent the spread of Socialism, which put
capital in public, not private, hands. The new order, then, was intended to help
out America’s friends, other capitalist countries, and hurt its rivals, the Socialist
and nationalist economies. Consequently, funding received from the IMF and