“The 1929 depression was so wide, so deep and so long because the international economic system was rendered unstable by British inability and United States unwillingness to assume responsibility for stabilising it.”
Such was the economic historian Charles Kindleberger’s conclusion about why the Depression became an international catastrophe. The world economy, he argued, needs a hegemon: a leader willing to incur some cost and risk for the sake of the whole. “For the world economy to be stabilised,” he wrote, “there has to be a stabiliser, one stabiliser.”
For decades after the second world war, the US was that leader. From the Latin American debt crises of the 1980s to the Asian financial crisis of 1997 and the global financial recession in 2008-09, Washington co-ordinated the response, and prospered by doing so.