In a global system of fixed exchange rates, shock absorbers take the form of strong regional currencies, issued by potent central banks, to act as secondary pillars in support of the system's main currency. There was need for at least one such currency in Europe and another in Asia. Of course strong regional currencies cannot be created; heavy industry powerhouses must underpin them. But here is the tricky part: industrial powerhouses produce more manufacturing goods than their domestic economies can absorb--think China today. To keep going, powerhouse economies need markets--surrounding states in permanent deficit with them so that they can remain in surplus.

So the first question was: which would the powerhouse economies in Europe and Asia be? In Europe the United Kingdom was an early candidate. Only, like most early front-runners, Britain went by the wayside. Its elites were determined to retain their grip on an empire that, in Washington's eyes, was both repugnant and unsustainable. Its returning soldiers, having shed their blood for king and country, were determined not to return to their prewar pitiful wages and abject living conditions. This was why Winston Churchill, the nation's wartime tower of strength, was swept away in a 1945 electoral landslide that ushered in a radical-sounding (especially to American ears) Labour government. A year later a fiscal crisis ended sterling's convertibility and further tarnished Britain's candidacy as the European pillar of America's global plan. [...]

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Why not France? For three excellent reasons. First, Germany industry was far more advanced than France's. In 1945, despite the hammering it had received from the Allies in the final stages of the war, German factories produced more than twice as much as France's. Secondly, the defeated Germans, fearing a pastoral future, would breathe a sigh of relief if the United States were to patronize their economy, invest in it and generally take it under their wing. In contrast, General de Gaulle and the vast majority of the French would be incensed by any hint of similar intervention, let alone a takeover. Thirdly, just as in the case of Japan America had written the constitution of the Federal Republic of Germany and even created the Bundesbank from scratch. The fact that American forces controlled West Germany's land, sea and airspace did not harm the notion either.

The second question now remained: who would provide the deficit hinterland for Germany's and Japan's powerhouse economies?