Systemic reforms to the U.S. monetary system is under way as the Federal Reserve regime change is shaking up the globalist world order. The Federal Reserve traditionally responds to inflation by restricting demand through high interest rates. This is the economic framework that has persisted since 1971 when the Bretton Woods system was effectively ended.
This Keynesian economic doctrine follows the underlying assumption that economic growth and low unemployment inherently cause inflation. But what if this is wrong?
The battle over the Federal Reserve: The original 1944 Bretton Woods system provided a architecture for global economic stability grounded in American economic principles, which post-1971 has been dismantled. It was Richard Nixon’s ending of the Bretton Woods gold standard in 1971 that paved the way for the rise of the offshore Eurodollar market in London. The petrodollar system was then arranged by Henry Kissinger with Saudi Arabia, a system where financial flows disproportionately favored London and Wall Street at the expense of the real productive economy in the U.S, comments Promethean Action.
President Trump’s approach now seeks to reverse decades of deindustrialization and British-financier dominance on the world stage by rejuvenating the American economy along the lines of the principles of Abraham Lincoln and Alexander Hamilton.
The economic philosophy that served as the foundation for the development of the nation was initially formed by Alexander Hamilton, and later advanced by Abraham Lincoln and William McKinley. Lincoln’s economic policy emphasized positive government intervention to promote social mobility, industrial growth, and national unity. He also believed in high tariffs to protect domestic manufacturing, federal funding for infrastructure projects, and a modernized, centralized banking system.
The battle over the Federal Reserve: Hamilton strongly opposed the British free trade system, which he believed mostly benefitted the rich, and advocated for an economic system in which the government’s role was to ensure that all citizens were to excel economically, not only the few. Hamilton fought in the American Revolutionary War and was instrumental in the drafting of the Constitution.
The economic theory of Alexander Hamilton, frequently referred to as the “American System” or Hamiltonian economics, was founded on the principles of national mercantilism and robust government-assisted development. It rejected purely agrarian models in favour of a diversified economy driven by manufacturing. Furthermore, it advocated a centralised monetary system, robust public credit, and protected domestic industries.
The battle over the Federal Reserve policy is a continuation of the clash between the American System (production-oriented economics) and the British imperial financial interests.
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The Bretton Woods System and 1971
The battle over the Federal Reserve: The Bretton Woods Conference in July 1944, convened 730 delegates from 44 nations at the Mount Washington Hotel in New Hampshire, shaping postwar global finance. President Roosevelt’s vision was to dismantle British colonial control and promote global development through an American-centered financial system.
The British economist, John Maynard Keynes proposed bancor, an international currency through a supranational central bank favoring British creditors. Keynes’ plan aimed to sustain British empire finance by automatically crediting debtor nations (like Britain) and forcing creditors (like the U.S.) to deplete reserves.
Roosevelt’s chief delegate, Harry Dexter White supported dollar as gold-backed reserve currency, fixed rates, capital controls to prevent speculation. Roosevelt’s system sided with productive nations and economic stability, reflecting Alexander Hamilton’s American System principles.
The latter proposal won, forming the basis of the Bretton Woods system which resulted in 27 years of unprecedented global economic growth.
The Bretton Woods system collapsed in 1971. After Roosevelt’s death, starting with Truman’s administration, the original Bretton Woods vision was corrupted. Several factors led to its collapse: London’s manipulations of the system, President Nixon’s choice to end gold convertibility of the dollar in 1971, the emergence of the Eurodollar market – the offshore dollar currency market dominated by London, which meant offshore dollar trading outside of U.S. jurisdiction, and the petrodollar recycling strengthening dollar usage but benefiting financial centers over producers.
The consequence was that while financial crises escalated, the U.S. and global real economies suffered deindustrialization.
The Trump administration’s national security strategy marks a departure from managed decline into active economic sovereignty and industrial rebuilding. Trump’s approach includes redefining strategic trade blocs such as Western Hemisphere and Indo-Pacific, engaging key players such as India and Japan alongside the U.S., Russia, and China. He wishes to end the imperial wars and increasing cooperation among sovereign industrial powers.
This policy intends to revive Roosevelt’s postwar economic intentions at a new scale. The Fed is deliberately being scaled back and subordinated to Treasury-led initiatives through leaders like Scott Bessent. This represents the strategic goal behind Trump’s foreign and economic policy — a new financial architecture prioritizing real production over speculative finance.
The Keynsian Federal Reserve
The battle over the Federal Reserve: Senior fellow at the Independent Institute and author of Good as Gold: How To Unleash The Power of Sound Money, Judy Shelton, nominated by former President Donald Trump to the Fed during his first term but blocked by Senate opposition, has become a prominent advocate for a new Bretton Woods system: Low interest rates, stable exchange rates, support for physical productivity and rising real wages, comments Promethean Action.
She recently challenges the Keynesian economic doctrine, arguing that that productive economic growth increases supply, so rising consumer demand should be met by increased output, thus mitigating inflation rather than causing it. Raising real wages and expanding physical production are the true means to combat inflation.
Shelton currently leads media advocacy efforts alongside the current Chair of the Federal Reserve of the United States, Kevin Warsh, recently sworn in at the Fed, signalling a push for systemic reforms to the U.S. monetary system.
President Trump, Treasury Secretary Scott Bessent, and Warsh are collectively portrayed as working to remove the Fed’s chokehold on the economy, instituting alternative credit mechanisms via the Treasury Department.
Trump’s diplomatic outreach to nations like Russia, China, India, and Japan is positioned as groundwork for a revival of a Bretton Woods-like system based on sovereign industrial and financial cooperation.
Kevin Warsh inherits a Federal Reserve dominated by Keynesian economists who repeatedly stifle economic booms by crippling productivity-driven growth with monetary tightening, injecting massive credit to stabilize Wall Street during crises (e.g., 2008, COVID-19), and maybe most of all – disproportionately benefiting asset holders rather than productive entrepreneurs or small businesses, Promethean Action points out.
When inflation arises post-crisis, the Fed responds with interest rate hikes, which harms entrepreneurs and small manufacturers who rely on credit. Despite criticism, however, Trump’s tariff policies have coincided with a resurgent U.S. manufacturing sector.
National Economic Director Kevin Hassett reports robust manufacturing growth in multiple sectors such as data center constructions, drug production (onshoring pharmaceutical manufacturing), automobile industry resurgence, electricity infrastructure, including equipment manufacturers like transformer producers, heavy equipment firms like Caterpillar increasing investment in power generation equipment.
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