What is Next for our Economy and Currency?

Reading Barrons today, I came across a good piece by editor Thomas Dolan. It reflects on where we are as a nation and world in respect to our economic system(s). It questions what will be the new-world order for exchange. I will paraphrase and add my own comments:

""The worst financial crisis since the Great Depression is claiming another casualty: American-style capitalism." The French president, Nicolas Sarkozy, has announced, with neither a trace of an accent nor a trace of sarcasm, that "Laissez-faire is finished."" And that is good, isn't it? Laissez-faire as a recipy for economic disaster. Humans are driven by greed and fear. Left alone in a capitalist economic system, people will try to maximize their own personal gain at the expense of their fellow man, the definition of greed. SOME regulation is required to keep man from hurting himself in his primative drive for economic gain.

As Dolan quotes and interprets, correctly in my opinion: "In one of the more lucid passages of Das Kapital, Karl Marx said, "In every stockjobbing swindle everyone knows that some time or other the crash must come, but every one hopes that it may fall on the head of his neighbor, after he himself has caught the shower of gold and placed it in safety. 'Après moi le déluge!' is the watchword of every capitalist and of every capitalist nation.""

America is painted by some as the land of greed, and in fact, many in this land act greedily and without regard for their fellow man, as will most people given the opportunity and means, and with NO limits or regulation. It did not help that after World War 2, America's was the only significant economy left standing in the world. Because America had the only functioning industrial complex, by lieu of geographic isolation and friendly status with the border nations of Mexico and Canada, when world finance leaders met in New Hampshire in 1944 to repair the world financial system, the decision was made to index all other currencies to the US Dollar, and the dollar to gold in what was called "Bretton Woods".

http://en.wikipedia.org/wiki/Bretton_Woods_system

As Thomas Dolan continues: "(The agreements reached at "Bretton Woods" were) dictated by the United States. It reflected the astounding dominance of America in the world economy (near the end of) World War II. The U.S. accounted for 40% of global economic output and had at least 80% of the gold reserves. Only the dollar was credible enough to be pegged to gold; other currencies could be pegged to the dollar. Thus, the U.S. became the world's creator and judge of money."

"The U.S. eventually abused its power to create the world's money, flooding the globe with unwanted dollars in such profusion (during the Johnson Presidency years of "guns and butter" during Vietnam and civil unrest), that it couldn't redeem them for gold (when foreign Central Banks so tried in 1971). In 1971 (the US governmnet) admitted that, went off the gold standard and left the world and itself with no restraints on the creation of money and credit."

I don't think it is possible to go back on the gold standard, nor is it wise. Gold and other forms of hard asset economic regulation do not reflect the ability of mankind to grow its economic value. Humans are creative and productive. We can make more with less as we apply intellect to practical problems of life. A currency fixed to a finite amount of gold does not reflect this fundamental truth. This is why gold as financial proxy does not now and never has worked.

What is needed is a GLOBAL method to measure in real time, human productivity and growth, and index the sum of tradable financial instruments to the sum of all productive capacity. This will allow economic growth without artificial restraint, but will also allow expansion without risk of inflation and currency devaluation. Accompanying this new form of financial index should be investing and banking regulations that are tight enough to ensure transparency of all financial structures and transactions, along with limits to leverage; but still loose enough so as to not choke off risk taking that leads to economic expansion and opportunities for everyone.

How can this be done across all economies around the planet? Greater minds than mine will need to figure this out. But it is worthy for global leaders to try to find a way. Do we need a Bretton Woods 3?