What history tells us on currency and credit

After hurricanes Katrina and Rita, and the deteriorating situation in Iraq, the US confronts a heightened “guns and butter” dilemma. The echoes here of the late 1960s grow louder by the day. Congress at that time refused to raise taxes to pay for the Vietnam war unless the Johnson administration cut its social programmes. When the cuts were not forthcoming the stage was set for the collapse of the Bretton Woods exchange rate system.