This highly respected study of U.S. financial diplomacy explores the faults built into the core of the World Bank and the IMF at their inception. Forensic detail reveals how the world’s core economic functions were sculpted to preserve US financial hegemony. Difficult to detect at the time, these problems have since become explicit as the failure of the international economic order has become apparent; the IMF and World Bank were set up to give aid to developing countries, but instead many of the world’s poorest countries have been plunged into insurmountable debt crises.

The book became famous for detailing how the removal of the gold standard left the world’s central banks with only one alternative vehicle: to hold their international reserves in U.S. Treasury securities.

The result was a self-financing circular flow of U.S. military spending and the investment takeover of foreign economies. The larger America’s balance-of-payments deficit grew, the more dollars ended up in the hands of central banks and sovereign wealth funds. Machiavelli could not have planned it better. By participating in this circular flow, nations in effect financed their own economic and military encirclement.

The 3rd edition includes the following additions:

• Monetary Imperialism in the Twenty-first Century and The Ending of Super Imperialism
• Britain’s 1945 Parliamentary debate on the British Loan and fracturing of the British Empire
• America’s promotion of offshore banking centers to attract hot money as a partial solution to its Cold War induced balance-of-payments deficit.

Hudson’s critique of the destructive course of the international economic system provides important insights into the real motivations at the heart of these institutions – and the increasing tide of opposition that they face around the world.