and the Issue of
World Monetary Control
It is a historical fact, documented in section 1 of this paper, that by virtually any concept official international reserves have expanded enormously in the past decade and are continuing to rise rapidly. It is also a historical fact, so familiar as to need no documentation, that the past decade has witnessed global inflation without precedent except during major wars. The central question addressed in section 2 is whether responsibility for the inflation can be attributed to the reserve explosion, as is contended by the school of thought recently described as "international reserve monetarism." Although I would certainly not deny that the defense of the dollar at an overvalued level prior to 1973 was an important cause of the generalization of world inflation, I argue that there is neither theoretical nor empirical evidence linking global reserves to world inflation, especially under present arrangements. The conclusion one can draw is that a coherent world monetary policy, in the sense of an assurance that the world money supply will expand at an appropriate rate, cannot be achieved by establishing and exercising collective control of the volume of world reserves. An alternative possible strategy for achieving the same goal, involving internationally agreed-upon and collectively consistent targets for the creation of credit in participating countries, is sketched in section 3.
Table 1 presents statistics regarding official reserves of the International Monetary Fund (IMF) "world" from 1959, the year when the Bretton Woods system effectively began to operate after the restoration of European convertibility, until the latest date for which statistics are