As policymakers from around the world gather in Washington for the annual meetings of the International Monetary Fund, there is a historical curiosity to consider. About every 15 years since the 1930s, Britain has experienced an autumnal financial crisis and political regime change that foreshadowed global upheavals a few years later.

Britain abandoned the gold standard in September 1931; the United States followed in 1933. The devaluation of sterling in September 1949 ended post-war hopes of a true multilateral monetary system and confirmed the hegemony of the dollar. The second post-war devaluation of the pound, in November 1967, set off a chain reaction that culminated in the dismantling of the Bretton Woods monetary system by US President Richard Nixon in 1971. Britain’s IMF bailout in September 1976 discredited Keynesian economics and led to the election of Margaret Thatcher, inspiring the monetarist revolution of Paul Volcker and Ronald Reagan. The burst of the European exchange rate mechanism on “Black Wednesday” in September 1992 forced France, Italy, Spain and Greece to accept Germany’s economic dominance over Europe. And the race against Britain’s most aggressive mortgage lender, Northern Rock, in September 2007 became a model for the global financial crisis a year later.

Britain has just suffered its latest financial convulsion. The near-collapses of the pound, the country’s government bond market and its pension system are likely to reverberate around the world in several unexpected ways.

Last month I argued that the British Conservative Party had outdone itself by finding in Liz Truss an even worse prime minister than Boris Johnson, Theresa May or David Cameron. But I also asked a paradoxical question about the politically disastrous experiment of “Trussonomics”. Could Truss’ bet on Keynesian stimulus and 1970s-style price controls succeed, at least in the short term? Could a modified version of Britain’s unorthodox mix of fiscal stimulus, price caps and energy subsidies become a model for other countries desperately trying to revive collapsing economies while keeping inflation at least temporarily under control?

Today it seems absurd to suggest that Britain could become a model of economic revolution, as it did under Thatcher. Yet beyond Truss’ political blunders, there are four features of his new economic policy that other countries might consider if they ever stop poking fun at Britain.

First, the overriding priority of economic policy in times of war and international energy upheaval may be avoiding deep recessions, rather than worrying about inflation targets and debt dynamics. Second, under such conditions, inflation can be better managed with price controls and tax subsidies than with monetary restrictions. Third, a policy mix of bold fiscal expansion and moderate monetary tightening can successfully stave off economic collapse for a year or two and set the stage for an orderly tightening of monetary policy in the longer term. And, fourth, when inflation and debt levels rise unexpectedly, fiscal sustainability may become easier, not harder, to achieve.

These four statements are heretical, according to current economic orthodoxy. Yet everything can be backed up with plausible economic arguments and historical examples (but with plenty of counter-arguments and counter-examples).

Consider “fiscal sustainability”. Suppose a government with 1% growth and 2% inflation aims for a debt-to-GDP ratio of 60%. Simple arithmetic shows that the government must keep its deficit below 1.8% of GDP to meet this definition of “fiscal sustainability”. Now suppose that growth is 1%, but inflation accelerates to 4% and the debt-to-GDP ratio rises to 90%. In this case, the government can borrow up to 4.5% of GDP and keep the debt ratio unchanged.

But if there were plausible arguments for the new UK policies, why did they throw financial markets into turmoil? The reason may lie in startling political and institutional blunders that all but guarantee the end of a long Tory hegemony in British politics.

By combining a useful Keynesian stimulus with an economically irrelevant and politically toxic abolition of Britain’s highest tax rate, Truss gave the impression that the new government’s real aim was to redistribute income from the poor to the poor. rich. By insisting, without evidence, that her tax cuts would boost Britain’s long-term growth trend, rather than merely promising to avert a disastrous crisis caused by the war in Ukraine, she is exposed to economic derision and has exposed itself to political failure when its supply – the miracle does not happen.