foreign exchange controls

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description: controls imposed by a government on the purchase/sale of foreign currencies

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Cryptoeconomics: Fundamental Principles of Bitcoin
by Eric Voskuil , James Chiang and Amir Taaki
Published 28 Feb 2020

Value Proposition The value of Bitcoin over its alternatives derives directly from removing the state from control over both monetary supply and transaction censorship . Advantages include freedom from seigniorage [216] , foreign exchange controls [217] , and financial surveillance [218] . These allow the money to be transferred to any person , in any place, at any time, without need for third party permission. These advantages represent cost reduction through the avoidance of tax. Seigniorage is directly a tax, while foreign exchange controls limit its evasion. The state itself often claims political independence [219] as an objective in the interest of limiting this taxing power.

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The term “reserve currency ” [243] refers to a state hoard, as required for settlement [244] of accounts with other states. Money reserves of people within a state generally consist of the state’s issued money – primarily notes or fiat, with a lesser amount in coin [245] . States buy reserve currency from people using monopoly money [246] , foreign exchange controls [247] and direct taxation. Using their own money discounts purchases by the amount of seigniorage [248] . Foreign exchange controls restrict or prohibit use of the reserve currency as money. By treating the reserve currency as property but not money, the state creates a tax on the apparent capital gain [249] in the reserve money when it devalues its money [250] against the reserve money through monetary inflation [251] .

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* * * [10] https://libbitcoin.info [11] https://bitcoincore.org [12] Chapter: Dedicated Cost Principle [13] https://www.dtu.dk/english [14] https://twitter.com [15] https://libbitcoin.info [16] https://github.com/libbitcoin/libbitcoin-system/wiki/Cryptoeconomics [17] Chapter: Inflation Principle [18] Chapter: Savings Relation [19] https://en.wikipedia.org/wiki/Amir_Taaki [20] Chapter: Foreword [25] https://libbitcoininstitute.org [26] https://en.wikipedia.org/wiki/Free_Software_Foundation [27] https://www.irs.gov/charities-non-profits/charitable-organizations/exemption-requirements-501c3-organizations [28] Chapter: Value Proposition [51] https://en.wikipedia.org/wiki/Ludwig_von_Mises [52] https://en.wikipedia.org/wiki/Murray_Rothbard [53] Chapter: Inflation Principle [54] Chapter: Money Taxonomy [55] Chapter: Full Reserve Fallacy [56] Chapter: Censorship Resistance Property [57] Chapter: Depreciation Principle [83] https://en.wikipedia.org/wiki/Spherical_geometry [84] Chapter: Permissionless Principle [85] Chapter: Censorship Resistance Property [86] Chapter: Hearn Error [87] https://en.wikipedia.org/wiki/Confinity [88] Chapter: Value Proposition [89] https://en.wikipedia.org/wiki/PayPal [90] Chapter: Risk Sharing Principle [91] Chapter: Proof of Work Fallacy [92] Chapter: Side Fee Fallacy [93] Chapter: Axiom of Resistance [94] Chapter: Qualitative Security Model [95] Chapter: Pooling Pressure Risk [96] Chapter: Risk Sharing Principle [98] Chapter: Threat Level Paradox [99] https://en.wikipedia.org/wiki/Foreign_exchange_controls [100] Chapter: Risk Sharing Principle [101] Chapter: Threat Level Paradox [102] Chapter: Balance of Power Fallacy [103] Chapter: Pooling Pressure Risk [104] http://www.imf.org/external/index.htm [105] https://en.wikipedia.org/wiki/Seigniorage [106] Chapter: Threat Level Paradox [107] https://www.theatlantic.com/magazine/archive/2017/09/big-in-venezuela/534177/ [110] Chapter: Fragmentation Principle [111] Chapter: Consolidation Principle [112] Chapter: Risk Sharing Principle [115] Chapter: Risk Sharing Principle [116] Chapter: Proof of Stake Fallacy [117] Chapter: Censorship Resistance Property [118] Chapter: Axiom of Resistance [119] Chapter: Money Taxonomy [120] Chapter: Reservation Principle [121] Chapter: Blockchain Fallacy [122] Chapter: Axiom of Resistance [123] https://en.wikipedia.org/wiki/Cognitive_dissonance [124] https://en.wikipedia.org/wiki/Wikipedia:Rage_quit [125] Chapter: Dumping Fallacy [126] Chapter: Qualitative Security Model [127] Chapter: Inflation Principle [128] Chapter: Lunar Fallacy [131] Chapter: Hearn Error [132] Chapter: Value Proposition [134] Chapter: Other Means Principle [135] https://en.m.wikipedia.org/wiki/Seigniorage [136] https://www.imf.org [137] Chapter: Pooling Pressure Risk [138] Chapter: Axiom of Resistance [139] Chapter: Risk Sharing Principle [140] https://en.wikipedia.org/wiki/Seigniorage [141] Chapter: Money Taxonomy [142] Chapter: Qualitative Security Model [143] https://en.wikipedia.org/wiki/Seigniorage [144] Chapter: Hearn Error [145] Chapter: Fedcoin Objectives [146] Chapter: Public Data Principle [147] Chapter: Proof of Work Fallacy [148] Chapter: Other Means Principle [149] Chapter: Censorship Resistance Property [150] https://en.wikiquote.org/wiki/Carl_von_Clausewitz [151] Chapter: Threat Level Paradox [152] https://mises.org/library/man-economy-and-state-power-and-market/html/p/1075 [153] Chapter: Pooling Pressure Risk [154] https://www.asicboost.com/patent [155] Chapter: Axiom of Resistance [156] Chapter: Risk Sharing Principle [157] Chapter: Public Data Principle [158] Chapter: Qualitative Security Model [159] Chapter: Threat Level Paradox [160] Chapter: Cryptodynamic Principles [161] Chapter: Value Proposition [162] Chapter: Other Means Principle [174] https://coinweek.com/bullion-report/bitcoin-vs-gold-10-crystal-clear-comparisons [175] Chapter: Stability Property [176] Chapter: Proximity Premium Flaw [177] Chapter: Risk Sharing Principle [178] Chapter: Balance of Power Fallacy [181] Chapter: Threat Level Paradox [182] https://en.wikipedia.org/wiki/Anonymizer [183] Chapter: Side Fee Fallacy [184] Chapter: Social Network Principle [185] https://en.wikipedia.org/wiki/Graph_(discrete_mathematics)#Directed_graph [186] https://en.wikipedia.org/wiki/Goodwill_(accounting) [189] Chapter: Axiom of Resistance [190] Chapter: Public Data Principle [191] Chapter: Balance of Power Fallacy [192] Chapter: Cockroach Fallacy [193] https://en.wikipedia.org/wiki/Blockchain [194] https://en.wikipedia.org/wiki/Cryptography [195] https://en.wikipedia.org/wiki/Free_and_open-source_software [196] Chapter: Prisoner’s Dilemma Fallacy [201] Chapter: Axiom of Resistance [203] Chapter: Money Taxonomy [204] Chapter: Risk Sharing Principle [205] Chapter: Axiom of Resistance [206] Chapter: Zero Sum Property [207] https://en.wikipedia.org/wiki/Subsidy [208] https://en.wikipedia.org/wiki/Black_market [209] https://www.theatlantic.com/magazine/archive/2017/09/big-in-venezuela/534177 [210] Chapter: Axiom of Resistance [211] Chapter: Pooling Pressure Risk [212] Chapter: Risk Sharing Principle [213] https://en.wikipedia.org/wiki/Attack_surface [214] https://en.wikipedia.org/wiki/Foreign_exchange_controls [215] Chapter: Centralization Risk [216] https://en.m.wikipedia.org/wiki/Seigniorage [217] https://en.m.wikipedia.org/wiki/Foreign_exchange_controls [218] https://en.m.wikipedia.org/wiki/Know_your_customer [220] Chapter: Money Taxonomy [221] Chapter: Scalability Principle [222] Chapter: Risk Sharing Principle [223] Chapter: Axiom of Resistance [224] Chapter: Value Proposition [225] Chapter: Other Means Principle [226] Chapter: Money Taxonomy [227] Chapter: Axiom of Resistance [229] Chapter: Risk Sharing Principle [230] https://en.m.wikipedia.org/wiki/Inflation [231] https://en.m.wikipedia.org/wiki/Seigniorage [232] Chapter: Depreciation Principle [233] Chapter: Money Taxonomy [234] https://en.m.wikipedia.org/wiki/Subjective_theory_of_value [235] Chapter: Time Preference Fallacy [236] https://en.m.wikipedia.org/wiki/Marginal_utility [237] https://en.m.wikipedia.org/wiki/Murray_Rothbard [238] https://mises.org/library/what-has-government-done-our-money/html/p/81 [246] Chapter: Money Taxonomy [247] https://en.wikipedia.org/wiki/Foreign_exchange_controls [248] https://en.wikipedia.org/wiki/Seigniorage [249] https://www.investopedia.com/articles/personal-finance/081616/understanding-taxes-physical-goldsilver-investments.asp [250] https://en.wikipedia.org/wiki/Inflation [251] https://en.wikipedia.org/wiki/Monetary_inflation [252] https://en.wikipedia.org/wiki/Exchange_rate#Parallel_exchange_rate [261] Chapter: Reserve Currency Fallacy [262] https://wiki.mises.org/wiki/Money_substitutes [263] Chapter: Reservation Principle [264] Chapter: Money Taxonomy [265] https://en.wikipedia.org/wiki/Monetary_inflation [266] https://en.wikipedia.org/wiki/Promissory_note [273] Chapter: Fedcoin Objectives [274] Chapter: Censorship Resistance Property [275] Chapter: Axiom of Resistance [276] Chapter: Cryptodynamic Principles [277] https://en.wikipedia.org/wiki/Lender_of_last_resort [278] https://en.wikipedia.org/wiki/Free_banking [279] Chapter: Thin Air Fallacy [280] https://en.wikipedia.org/wiki/Central_bank [281] https://en.wikipedia.org/wiki/Discount_window [282] https://en.wikipedia.org/wiki/Structure_of_the_Federal_Reserve_System [283] https://www.frbdiscountwindow.org/pages/discount-rates/current-discount-rates [309] Chapter: Money Taxonomy [310] https://www.washingtonpost.com/news/wonk/wp/2013/12/16/how-tight-jeans-almost-ruined-americas-money [311] https://www.nytimes.com/2018/11/21/business/sweden-cashless-society.html [312] Chapter: Fedcoin Objectives [313] https://www.riksbank.se/en-gb/payments--cash/e-krona [314] Chapter: Reserve Currency Fallacy [315] https://en.wikipedia.org/wiki/Gold_standard [316] Chapter: Value Proposition [320] https://en.wikipedia.org/wiki/Rate_of_return [324] Chapter: Pooling Pressure Risk [328] Chapter: Risk Sharing Principle [329] https://www.federalreserve.gov/aboutthefed/bios/board/default.htm [330] Chapter: Axiom of Resistance [331] https://www.coindesk.com/uasf-revisited-will-bitcoins-user-revolt-leave-lasting-legacy [332] Chapter: Proof of Work Fallacy [337] Chapter: Efficiency Paradox [338] Chapter: Stability Property [339] Chapter: Qualitative Security Model [340] Chapter: Variance Discount Flaw [341] Chapter: Censorship Resistance Property [342] Chapter: Axiom of Resistance [343] Chapter: Pooling Pressure Risk [344] Chapter: Relay Fallacy [345] Chapter: Censorship Resistance Property [346] Chapter: Efficiency Paradox [347] http://primecoin.io [349] https://en.wikipedia.org/wiki/Paradox [351] Chapter: Zero Sum Property [352] Chapter: Pooling Pressure Risk [355] https://en.wikipedia.org/wiki/Monotonic_function [356] Chapter: Money Taxonomy [357] https://en.m.wikipedia.org/wiki/Store_of_value [358] https://en.wikipedia.org/wiki/Subjective_theory_of_value [359] https://en.wikipedia.org/wiki/Proof-of-stake [360] Chapter: Proof of Stake Fallacy [361] Chapter: Utility Threshold Property [362] Chapter: Money Taxonomy [364] Chapter: Side Fee Fallacy [365] https://en.wikipedia.org/wiki/Step_function [366] http://www.investopedia.com/terms/e/economicprofit.asp [367] Chapter: Pooling Pressure Risk [368] https://en.wikipedia.org/wiki/Time_preference [369] Chapter: Proof of Work Fallacy [370] Chapter: Balance of Power Fallacy [371] https://en.wikipedia.org/wiki/Red_herring [372] Chapter: Risk Sharing Principle [375] https://en.wikipedia.org/wiki/Zero-sum_game [376] https://en.wikipedia.org/wiki/Win-win_game [377] https://en.wikipedia.org/wiki/Chaos_theory [379] Chapter: Side Fee Fallacy [380] Chapter: Pooling Pressure Risk [381] Chapter: Zero Sum Property [382] Chapter: Threat Level Paradox [385] Chapter: Balance of Power Fallacy [386] Chapter: Proximity Premium Flaw [387] Chapter: Variance Discount Flaw [388] https://en.wikipedia.org/wiki/Economies_of_scale [389] Chapter: Axiom of Resistance [390] https://www.theatlantic.com/magazine/archive/2017/09/big-in-venezuela/534177/ [391] Chapter: Relay Fallacy [392] Chapter: Risk Sharing Principle [393] Chapter: Balance of Power Fallacy [394] https://www.federalreserve.gov [395] Chapter: State Banking Principle [396] https://en.wikipedia.org/wiki/Debasement [397] https://en.wikipedia.org/wiki/Legal_tender [398] https://en.wikipedia.org/wiki/Federal_Reserve_Note [399] Chapter: Money Taxonomy [400] https://en.wikipedia.org/wiki/Executive_Order_6102 [401] https://en.wikipedia.org/wiki/International_Monetary_Fund [404] https://en.wikipedia.org/wiki/Opportunity_cost [405] Chapter: Pooling Pressure Risk [406] Chapter: Variance Discount Flaw [407] Chapter: Axiom of Resistance [410] Chapter: Zero Sum Property [411] https://www.cs.cornell.edu/~ie53/publications/btcProcFC.pdf [413] Chapter: Pooling Pressure Risk [414] Chapter: Proximity Premium Flaw [416] https://en.wikipedia.org/wiki/Incentive_compatibility [418] Chapter: Pooling Pressure Risk [419] https://en.m.wikipedia.org/wiki/History_of_email_spam [420] Chapter: Risk Sharing Principle [423] Chapter: Pooling Pressure Risk [424] Chapter: Proximity Premium Flaw [425] Chapter: Axiom of Resistance [426] https://en.wikipedia.org/wiki/Zero-sum_game [427] Chapter: Pooling Pressure Risk [428] https://en.wikipedia.org/wiki/Closed_system [429] Chapter: Proximity Premium Flaw [430] Chapter: Variance Discount Flaw [431] https://en.wikipedia.org/wiki/Economies_of_scale [432] https://en.wikipedia.org/wiki/Subsidy [433] Chapter: Threat Level Paradox [434] http://gavinandresen.ninja/a-definition-of-bitcoin [435] https://bitcoin.org/bitcoin.pdf [436] Chapter: Cryptodynamic Principles [437] Chapter: Brand Arrogation [438] https://bitcoin.org/en/bitcoin-core [439] https://libbitcoin.info [440] Chapter: Maximalism Definition [441] Chapter: Custodial Risk Principle [443] https://en.wikipedia.org/wiki/Cryptographic_hash_function [444] Chapter: Risk Sharing Principle [446] Chapter: Money Taxonomy [447] Chapter: Cryptodynamic Principles [448] Chapter: Money Taxonomy [450] Chapter: Utility Threshold Property [451] Chapter: Money Taxonomy [452] https://en.wikipedia.org/wiki/Gresham%27s_law#Reverse_of_Gresham's_law_(Thiers'_law) [453] Chapter: Fragmentation Principle [460] Chapter: Money Taxonomy [461] https://en.wikipedia.org/wiki/Barter [462] https://en.wikipedia.org/wiki/Goods_and_services [463] Chapter: Consolidation Principle [464] Chapter: Network Effect Fallacy [465] Chapter: Dumping Fallacy [466] Chapter: Replay Protection Fallacy [467] https://en.m.wikipedia.org/wiki/Net_present_value [474] Chapter: Proof of Stake Fallacy [475] Chapter: Censorship Resistance Property [476] Chapter: Substitution Principle [478] Chapter: Consolidation Principle [479] Chapter: Side Fee Fallacy [482] Chapter: Money Taxonomy [483] Chapter: Censorship Resistance Property [484] Chapter: Axiom of Resistance [485] https://eprint.iacr.org/2017/893.pdf [486] Chapter: Energy Waste Fallacy [487] Chapter: Pooling Pressure Risk [488] Chapter: Proof of Memory Façade [489] Chapter: Energy Waste Fallacy [490] Chapter: Censorship Resistance Property [491] Chapter: Other Means Principle [495] Chapter: Cryptodynamic Principles [496] Chapter: Value Proposition [497] Chapter: Proof of Stake Fallacy [498] Chapter: Axiom of Resistance [499] Chapter: Proof of Memory Façade [500] Chapter: Credit Expansion Fallacy [501] Chapter: Money Taxonomy [502] https://en.wikipedia.org/wiki/Seigniorage [503] Chapter: State Banking Principle [504] https://www.frbdiscountwindow.org [505] https://www.fdic.gov/resources/deposit-insurance [507] Chapter: Dumping Fallacy [508] https://en.m.wikipedia.org/wiki/Hoarding_(economics) [509] Chapter: Replay Protection Fallacy [510] https://en.m.wikipedia.org/wiki/Net_present_value [511] Chapter: Consolidation Principle [515] Chapter: Depreciation Principle [516] https://mises.org/library/man-economy-and-state-power-and-market/html/p/996 [517] Chapter: Reserve Currency Fallacy [518] https://en.wikipedia.org/wiki/Foreign-exchange_reserves [519] https://en.wikipedia.org/wiki/Money_supply#United_States [520] https://en.wikipedia.org/wiki/Money_supply#Money_creation_by_commercial_banks [521] Chapter: State Banking Principle [522] https://www.federalreserve.gov/releases/h3/current/default.htm [543] Chapter: Savings Relation [544] https://en.wikipedia.org/wiki/Time_preference [545] Chapter: Unlendable Money Fallacy [548] Chapter: Production and Consumption [561] https://en.wikipedia.org/wiki/Monetary_inflation [562] Chapter: Unlendable Money Fallacy [563] https://en.m.wikipedia.org/wiki/Labor_theory_of_value [564] https://en.m.wikipedia.org/wiki/Catallactics [565] Chapter: Production and Consumption [566] Chapter: Depreciation Principle [569] Chapter: Time Preference Fallacy [570] Chapter: Labor and Leisure [571] https://en.wikipedia.org/wiki/Fractional-reserve_banking [572] Chapter: Money Taxonomy [573] Chapter: Thin Air Fallacy [574] https://en.wikipedia.org/wiki/Full-reserve_banking [602] https://en.wikipedia.org/wiki/Inflation [603] Chapter: Credit Expansion Fallacy [604] https://en.wikipedia.org/wiki/Gold_mining [605] Chapter: Time Preference Fallacy [607] Chapter: Risk Free Return Fallacy [635] https://en.wikipedia.org/wiki/Tautology_(logic) [636] Chapter: Production and Consumption [637] Chapter: Labor and Leisure [639] Chapter: Regression Fallacy [640] https://en.wikipedia.org/wiki/Seigniorage [641] https://en.wikipedia.org/wiki/Catallactics [642] Chapter: Speculative Consumption [643] https://en.wikipedia.org/wiki/Pump_and_dump [644] Chapter: Time Preference Fallacy [645] Chapter: Savings Relation [646] https://en.wikipedia.org/wiki/Use_value [647] https://en.m.wikipedia.org/wiki/Fungibility [648] Chapter: Dumping Fallacy [649] https://en.wikipedia.org/wiki/Action_axiom [650] Chapter: Production and Consumption [651] https://en.m.wikipedia.org/wiki/Goods_and_services [652] https://en.wikipedia.org/wiki/Waste [653] https://en.wikipedia.org/wiki/Murray_Rothbard [654] https://mises.org/library/man-economy-and-state-power-and-market/html/p/926 [655] Chapter: Expression Principle [656] Chapter: Time Preference Fallacy [657] Chapter: Pure Bank [658] Chapter: Reservation Principle [659] Chapter: Depreciation Principle [661] https://en.wikipedia.org/wiki/Action_axiom [662] https://en.m.wikipedia.org/wiki/Goods_and_services [663] Chapter: Depreciation Principle [664] Chapter: Labor and Leisure [665] https://en.wikipedia.org/wiki/Waste [666] Chapter: Pure Bank [667] Chapter: Reserve Definition [668] https://en.m.wikipedia.org/wiki/Dividend [677] https://en.wikipedia.org/wiki/Free_banking [678] https://en.wikipedia.org/wiki/Federal_Reserve [679] https://www.fdic.gov [680] https://en.wikipedia.org/wiki/Discount_window [681] https://en.wikipedia.org/wiki/Seigniorage [682] Chapter: Money Taxonomy [683] Chapter: Inflation Principle [684] https://en.wikipedia.org/wiki/Inflation [685] https://en.wikipedia.org/wiki/Deflation [686] Chapter: Time Preference Fallacy [687] https://en.m.wikipedia.org/wiki/Arbitrage [688] https://en.wikipedia.org/wiki/Demurrage_(currency) [689] https://en.wikipedia.org/wiki/Settlement_(finance) [690] https://en.wikipedia.org/wiki/Maturity_(finance) [691] Chapter: Depreciation Principle [692] https://en.wikipedia.org/wiki/Opportunity_cost [693] https://en.wikipedia.org/wiki/Compound_interest [699] Chapter: Savings Relation [700] Chapter: Inflation Principle [704] Chapter: Time Preference Fallacy [705] https://en.wikipedia.org/wiki/Catallactics [706] https://en.wikipedia.org/wiki/Murray_Rothbard [707] https://mises.org/library/man-economy-and-state-power-and-market/html/p/989 [708] https://en.wikipedia.org/wiki/Capital_requirement [709] Chapter: Expression Principle [715] Chapter: Depreciation Principle [726] Chapter: Savings Relation [727] Chapter: Time Preference Fallacy [732] Chapter: Depreciation Principle [733] Chapter: Full Reserve Fallacy [734] Chapter: Credit Expansion Fallacy [735] Chapter: Money Taxonomy [739] Chapter: Credit Expansion Fallacy [740] Chapter: Time Preference Fallacy [741] Chapter: Money Taxonomy [742] Chapter: Inflation Principle [756] Chapter: Speculative Consumption [757] Chapter: Regression Fallacy [758] https://en.m.wikipedia.org/wiki/Use_value [759] https://en.m.wikipedia.org/wiki/Barter [760] https://en.m.wikipedia.org/wiki/Medium_of_exchange [761] https://mises.org/library/human-action-0/html/pp/778 [762] Chapter: Money Taxonomy [763] https://en.m.wikipedia.org/wiki/Commodity [764] https://en.m.wikipedia.org/wiki/Tautology_(logic) [765] Chapter: Money Taxonomy [766] https://en.wikipedia.org/wiki/Currency [767] https://wiki.mises.org/wiki/Money_substitutes [779] Chapter: Credit Expansion Fallacy [780] https://en.wikipedia.org/wiki/Promissory_note [788] https://en.wikipedia.org/wiki/Legal_tender [789] https://en.wikipedia.org/wiki/Seigniorage [790] Chapter: Stability Property [791] https://en.wikipedia.org/wiki/Fiat_money [797] https://en.wikipedia.org/wiki/Monetary_inflation [798] https://en.wikipedia.org/wiki/Purchasing_power [799] Chapter: Inflation Principle [803] https://en.wikipedia.org/wiki/Commodity_money [808] https://wiki.mises.org/wiki/Money_substitutes [809] https://financial-dictionary.thefreedictionary.com/Contractual+Claim [810] Chapter: Debt Loop Fallacy [811] https://en.wikipedia.org/wiki/Securitization [812] https://en.wikipedia.org/wiki/Banknote [813] https://en.wikipedia.org/wiki/Gold_certificate [814] https://en.wikipedia.org/wiki/Representative_money [815] https://www.investopedia.com/terms/e/electronic-money.asp [816] Chapter: Regression Fallacy [819] https://en.wikipedia.org/wiki/Counterfeit_money [823] Chapter: Cryptodynamic Principles [824] https://en.wikipedia.org/wiki/Currency [825] Chapter: Credit Expansion Fallacy [826] Chapter: Reserve Definition [827] https://wiki.mises.org/wiki/Regression_theorem [828] Chapter: Money Taxonomy [829] https://en.m.wikipedia.org/wiki/Use_value [830] https://en.m.wikipedia.org/wiki/Barter [831] https://mises.org/library/human-action-0/html/pp/778 [833] Chapter: Collectible Tautology [837] Chapter: Depreciation Principle [838] Chapter: Savings Relation [843] https://en.wikipedia.org/wiki/Risk-free_interest_rate [844] Chapter: Credit Expansion Fallacy [855] Chapter: Full Reserve Fallacy [856] https://en.wikipedia.org/wiki/Representative_money [857] Chapter: Credit Expansion Fallacy [858] https://en.wikipedia.org/wiki/Inflation [860] https://wiki.mises.org/wiki/Money_substitutes [861] Chapter: Money Taxonomy [874] https://en.m.wikipedia.org/wiki/Talking_past_each_other [875] https://en.m.wikipedia.org/wiki/Use_value [876] Chapter: Value Proposition [877] https://en.m.wikipedia.org/wiki/Metallism [878] Chapter: Regression Fallacy [879] https://en.m.wikipedia.org/wiki/Chartalism [880] Chapter: Debt Loop Fallacy [886] https://en.wikipedia.org/wiki/Bank_run [887] https://en.wikipedia.org/wiki/Central_bank [888] https://en.wikipedia.org/wiki/Lender_of_last_resort [889] Chapter: State Banking Principle [890] https://en.wikipedia.org/wiki/Monetary_inflation [891] https://en.wikipedia.org/wiki/Fisher_equation [892] https://en.wikipedia.org/wiki/Monetary_inflation [893] Chapter: Depreciation Principle [894] Chapter: Money Taxonomy [895] https://en.wikipedia.org/wiki/Seigniorage [897] Chapter: Inflation Principle [898] https://en.wikipedia.org/wiki/Inflation [899] Chapter: Time Preference Fallacy [901] Chapter: Speculative Consumption [905] https://medium.com/@paulbars/magic-internet-money-how-a-reddit-ad-made-bitcoin-hit-1000-and-inspired-south-parks-art-b414ec7a5598 [906] Chapter: Money Taxonomy [907] Chapter: Depreciation Principle [908] Chapter: Stability Property [909] https://www.fool.com/investing/2017/05/25/could-the-price-of-bitcoin-go-to-1-million.aspx [910] https://en.wikipedia.org/wiki/Gross_world_product [911] https://medium.com/@100trillionUSD/modeling-bitcoins-value-with-scarcity-91fa0fc03e25 [912] Chapter: Stock to Flow Fallacy [913] Chapter: Reservation Principle [914] Chapter: Reserve Currency Fallacy [915] https://en.wikipedia.org/wiki/Catallactics [916] https://mises.org/library/man-economy-and-state-power-and-market/html/p/949 [917] Chapter: Money Taxonomy [918] Chapter: Credit Expansion Fallacy [919] Chapter: Time Preference Fallacy [920] https://en.wikipedia.org/wiki/Central_bank [921] Chapter: State Banking Principle [922] https://en.wikipedia.org/wiki/Settlement_(finance) [923] Chapter: Debt Loop Fallacy [924] https://en.wikipedia.org/wiki/Money_supply#United_States [931] Chapter: Permissionless Principle [932] https://en.wikipedia.org/wiki/Seigniorage [933] https://voxeu.org/index.php?

pages: 346 words: 90,371

Rethinking the Economics of Land and Housing
by Josh Ryan-Collins , Toby Lloyd and Laurie Macfarlane
Published 28 Feb 2017

Feudal system – The economy and political power structure prevalent in the medieval era, under which the nobility held land in return for loyalty, and providing services such as serving or fighting for their lord. Financialisation – A term used to describe the transformation of work, services, land or other forms exchange into financial instruments, for example debt instruments like bonds, that can traded on financial markets. Foreign exchange controls – Various forms of controls imposed by a government on the purchase/sale of foreign currencies by residents or on the purchase/sale of local currency by non-residents. Gini coefficient – A measure of statistical dispersion intended to represent the income distribution of a nation’s residents.

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As the tax incentives for homeownership were increased after the 1963 abolition of imputed rent charges (see Chapter 4), popular pressure grew for wider homeownership. The deregulation of mortgage finance The Thatcher government which came to power in 1979 embarked on a major liberalisation of the financial sector. Foreign exchange controls were removed immediately, which opened the banking sector to greater foreign competition and gave UK banks access to overseas funding, in particular the fast developing Eurodollar markets. To allow UK banks to compete more effectively with foreign banks, further steps were taken including the removal of the ‘corset’.

…

Addison Act (1919), 78 adverse selection, 127 affordable housing: capital grants, 34; housing investment bank proposal, 209–10; need for public investment, 222–3; planning permission conditionalities, 33, 93–6, 216; public corporations’ investment levels, 220–1; see also social housing age, and net property wealth, 181–2, 181 agricultural land, 9, 61, 68, 69, 122–3 agricultural tariffs, 43 agriculture: common agricultural policy, 33, 122–3; increase in productivity, 68 Alliance and Leicester, 139 Aquinas, Thomas, 16 Arkwright, Richard, 71 armed forces, demobilisation, 78, 79 Association of Residential Letting Agents (ARLA), 134 Assured Shorthold Tenancy, 89 Australia: house price to income ratio, 112, 114; land value taxes, 204–5; mortgage market structure, 156 Bank of England, 210 banks/banking: alternatives to bank debt financing, 211–12; business relationship banking, 208–9; credit and money creation, 115, 206–7; housing investment bank proposal, 209–10; incentives for non-property lending, 206–8; income from mortgage interest, 61; international regulation, 135; land as lending collateral, 7, 55, 127–8; land-related credit creation, 8, 114–19, 190–1, 222; lending by industry sector, 118–19, 118; lending relative to GDP, 117–18, 117; leverage, 184; macroprudential policy, 206; minimum deposit requirements (corset controls), 132, 155; money supply, 115; regulating property-related credit, 154–5; securitisation, 135–42, 156–7, 156; structural reform recommendations, 208–9; wholesale money markets, 131, 139 Basel Accord (Basel I), 135 basements, 57, 57n16 Bath, 71 Belgium, mortgage market structure, 156 Bradford and Bingley, 139 Bretton Woods system, 83 Brighton, 71 building societies: demutualisation, 134–5, 136; effect of mortgage funding deregulation, 132–3; emergence, 72, 128; favourable tax regime, 132; history, 129; interest rate cartel, 130, 132; mergers and acquisitions, 136; mortgage funding arrangements, 131; stability, 129–30, 132, 158 Building Societies Act (1986), 133 buy-to-let (BTL): increase, 7, 184; mortgages, 122, 134; overseas investors, 100, 160; tax relief, 62, 86, 160 Cadbury, George, 71 Canada, mortgage market structure, 156 capital: conflated with land, 48–52, 62; definition, 37–8; differences between land and capital, 51–7; differences between wealth and capital, 170–1; factor in production, 37–8 capital gains tax: for buy-to-let landlords, 62; definition, 85–6; exemption for primary residencies, 85–6, 104, 202 capital goods depreciation, 52–3 capital investment, 56 Capital Markets Union (CMU), 141 capitalism: Golden Age, 83; land as private property, 36; Primitive Accumulation concept, 18 Cerberus Capital Management, 136, 137 cholera, 70, 73 Churchill, Winston, 76–7, 189 Clark, John Bates, 48–51, 57–9 classical economics, 17, 38, 45, 48, 70 co-ownership housing, 72, 86 coal industry, 69 collateral: commercial real estate, 148; land as, 7, 20–1, 127–8, 160; see also home equity withdrawal collectivisation, 43 commercial real estate (CRE), 148–50; bank lending, 118–19, 118, 130, 148; credit bubbles and crises, 111, 148–9; data sets, 63; effect of UK vote to leave EU, 150; foreign investment, 149; investment returns, 148, 149–50; and Japanese crisis, 151–3; rating lists, 202; time-limited leases, 214 common agricultural policy, 33, 122–3 communications technology, 9 Community Land Trusts, 72, 198–9, 214, 221 commuting, 27 Competition, Credit and Control Act (1971), 130 compulsory purchase: ‘hope value’ court judgments, 88; housing construction, 80–1; infrastructure projects, 31, 73, 196–7, 222 conservation areas, 32 construction industry see housing construction industry consumption: affected by house deposit saving, 145; and asset-based wealth, 123–4; consumption-to-income ratio trends, 143–4, 144; equity release and consumer demand, 145–7, 146; and house prices, 147; and inequality, 185–7 cooperative housing, 72, 215 Corn Laws, 43, 69–70 corporate income tax, 168–9 council tax, 104, 201, 202 credit conditions index, 143–4, 144 credit controls, 132 credit liberalisation, 144 Crown Estate, 19, 31 Darrow, Charles, 47 de Soto, Hernando, 21 debt, public sector debt, 219–21 debt-to-income ratio, 115–16, 116, 139, 159, 186 defaults, mortgage lending, 141 deindustrialisation, 168 Denmark: land value taxes, 204; size of new-builds, 97 developing economies, and private property, 21–2 development charge, 82 digital economy, 9 Eastern Europe, serfdom, 23–4 Eccles, Marriner, 186–7 economic growth: dependence on land values, 190–1; and homeownership, 21–2 economic modelling, 50–1, 155, 218 economic rent: Crown Estate, 31; determined by collective rather than individual investment, 40; financial sector, 44, 184; infrastructure projects, 194–5, 196–7; and land, 39–44, 56–7; and land taxes, 34–5, 45–8, 76–7, 199, 222; and landownership, 10–13, 25; oil sector, 44; urban areas, 41–2, 73–4 economic theory: landownership, 16–18; marginal productivity theory, 49–50, 51, 56, 57–9, 165–7; shortcomings, 64–5, 191–2, 217; teaching reform proposals, 218 Edinburgh New Town, 66, 71, 80 eminent domain theory, 16 Enlightenment, 16 equity release see home equity withdrawal European Investment Bank, 210 European Union: Capital Markets Union (CMU), 141; common agricultural policy, 33, 122–3; full-recourse mortgage loans, 141–2; government debt, 220; UK decision to leave, 150, 160 Eurostat, 64, 219 factory workers, accommodation, 71 feudal system, 18, 19, 32 financial crisis (2007-8): causes, 153–4, 159–60, 186–7; effect on mortgages, 100; and house and land prices, 101, 140; Northern Rock, 136–7; payment defaults, 123; UK banking collapse, 139–40 financial instability, 152–3, 154–5, 185–7 Financial Policy Committee, 155, 206 financial sector: economic rent, 44, 184; profitability, 184; reform proposals, 205–12; see also banks/banking financialisation, 120; declining wage share in national income, 169; land, 14, 110–12; land and property, 160 First World War, 77 Fisher, Irving, 152 Florida, credit-driven bubbles, 111 foreign exchange controls, 132 France: feudal system, 32; Livrét A accounts, 210; mortgage market structure, 156; private tenancy, 32; residential property wealth, 9, 10 French Physiocrats, 38 Friedman, Milton, 87 Garden City movement, 72, 75–6 GDP: and bank lending by sector, 118–19, 118; and declining wage share, 169; and domestic mortgage lending, 118, 156–8, 156; and home equity withdrawal, 146; and household debt, 151; and outstanding credit loans, 117; and property wealth, 9–10, 10 George, Henry, 12, 25, 34, 45, 58, 60–1, 76, 87, 199; Progress and Poverty, 40–1, 46–7 Germany: business relationship banking, 208–9; credit controls, 207; economic success and low homeownership, 215; house price to income ratio, 112, 114; mortgage market structure and homeownership, 156, 157–8; private tenancy, 32 Gini coefficient, 163, 177, 178 globalisation, 167–8, 169 Great Depression, 186–7 Great Moderation, 154, 191 Grotius, Hugo, 16 Halifax Bank of Scotland (HBOS), 139 health problems, and inequality, 185 help-to-buy schemes, 122 Henry VIII, King, 20 high-rise buildings, 57 Hill, Octavia, 71 home equity withdrawal: contribution to consumer demand, 145–7, 146; and financial crisis, 187; and living standards, 180; and mortgage market structure, 156–7, 156; to finance consumer goods, 127, 133 homeownership: benefits, 101; difficulties in saving for, rent trap, 106; downward trend, 83, 103, 178; as financial asset, 63; housing costs, 179; increased unemployment and reduced labour mobility, 27–8, 215; interwar growth, 78; investment opportunity, 92; low-supply equilibrium, 102; and mortgage market structure, 156–8, 156; mutual co-ownership, 86; political and electoral dominance, 24–5, 92; Right to Buy policy, 89, 90–1, 103; rise in 1970s/80s, 86; second homes, 160; trends, 106–7, 107 Hong Kong, Mass Transit Railway, 195 house building see housing construction industry house prices: boom and bust, 88, 99; and consumer demand, 147; and credit availability, 116–18; financial crisis collapse, 140; and growing inequality, 177–8; house price-credit feedback cycle, 119–24; increase with buy-to-let mortgages, 134; low-supply equilibrium, 102; negative equity, 123, 133–4; price-to-income ratios, 99, 100, 112–14, 114, 139, 183, 183; and real disposable income, 115–16, 116; replacement cost vs market price, 6; rise due to insufficient supply, 63; volatility, 8, 8, 112–14, 114; volatility reduced by land taxes, 200 Housing Act (1924), 78 Housing Act (1980), 89 Housing Act (1988), 89 housing associations, 72, 82, 83, 93 housing benefit, 34, 96, 106 housing construction industry: barriers to entry, 97; building clubs, 72; compulsory land purchase, 80–1; concentration, 96–7; costs, 8, 95; development charge, 82; effect of financial crisis, 101; land banks (with planning permission), 96–7, 101; peak, 82; poor design quality, 97; private house building, 78; size trends, 97; speculative house building, 93, 94–5, 96; trends, 82–5, 82, 83 housing costs: by tenure type, 179; and inequality, 179–80 housing demand, 63, 114 Housing, Town Planning, &c.

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Money Mischief: Episodes in Monetary History
by Milton Friedman
Published 1 Jan 1992

It adjusted to the further appreciation of its currency vis-a-vis non-U.S. currencies by permitting prices and wages to adjust. The example is blurred because most of the appreciation of the U.S. dollar occurred before Hong Kong unified its currency with the U.S. dollar. Pegged exchange rates can be maintained for a time by governmentally arranged capital flows, by foreign exchange controls, or by restrictions on international trade. But there is ample evidence by now that these are at best temporary expedients and generally lead to the conversion of minor problems into major crises. That was certainly the experience under Bretton Woods before 1971. Exchange rate changes were numerous and often massive.

…

None of these arrangements has been able to avoid exchange crises and exchange rate changes, and several have simply broken down. The EMS has been working reasonably well because Germany has been willing to play the role that the United States played under Bretton Woods, of pursuing a moderately noninflationary policy and tolerating capital movements and foreign exchange controls imposed by other member countries. I suspect that EMS, too, will break down if Germany ever becomes unwilling to follow those policies, as it well may as a result of the unification of East and West Germany. Many observers give the EMS credit for enabling its members, notably France, to reduce inflation in recent years.

pages: 334 words: 98,950

Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism
by Ha-Joon Chang
Published 26 Dec 2007

If private enterprises worked well, that was fine; if they did not invest in important areas, the government had no qualms about setting up state-owned enterprises (SOEs); and if some private enterprises were mismanaged, the government often took them over, restructured them, and usually (but not always) sold them off again. The Korean government also had absolute control over scarce foreign exchange (violation of foreign exchange controls could be punished with the death penalty). When combined with a carefully designed list of priorities in the use of foreign exchange, it ensured that hard-earned foreign currencies were used for importing vital machinery and industrial inputs. The Korean government heavily controlled foreign investment as well, welcoming it with open arms in certain sectors while shutting it out completely in others, according to the evolving national development plan.

…

Before the Second World War, they didn’t need to – they were mostly making, rather than receiving, foreign investments. But, after the Second World War, when they started receiving large amounts of American, and then Japanese, investment, they also restricted FDI flows and imposed performance requirements. Until the 1970s, this was done mainly through foreign exchange controls. After these controls were abolished, informal performance requirements were used. Even the ostensibly foreign-investor-friendly UK government used a variety of ‘undertakings’ and ‘voluntary restrictions’ regarding local sourcing of components, production volumes and exporting.50 When Nissan established a UK plant in 1981, it was forced to procure 60% of value added locally, with a time scale over which this would rise to 80%.

pages: 347 words: 99,317

Bad Samaritans: The Guilty Secrets of Rich Nations and the Threat to Global Prosperity
by Ha-Joon Chang
Published 4 Jul 2007

If private enterprises worked well, that was fine; if they did not invest in important areas, the government had no qualms about setting up state-owned enterprises (SOEs); and if some private enterprises were mismanaged, the government often took them over, restructured them, and usually (but not always) sold them off again. The Korean government also had absolute control over scarce foreign exchange (violation of foreign exchange controls could be punished with the death penalty). When combined with a carefully designed list of priorities in the use of foreign exchange, it ensured that hard-earned foreign currencies were used for importing vital machinery and industrial inputs. The Korean government heavily controlled foreign investment as well, welcoming it with open arms in certain sectors while shutting it out completely in others, according to the evolving national development plan.

…

Before the Second World War, they didn’t need to – they were mostly making, rather than receiving, foreign investments. But, after the Second World War, when they started receiving large amounts of American, and then Japanese, investment, they also restricted FDI flows and imposed performance requirements. Until the 1970s, this was done mainly through foreign exchange controls. After these controls were abolished, informal performance requirements were used. Even the ostensibly foreign-investor-friendly UK government used a variety of ‘undertakings’ and ‘voluntary restrictions’ regarding local sourcing of components, production volumes and exporting.50 When Nissan established a UK plant in 1981, it was forced to procure 60% of value added locally, with a time scale over which this would rise to 80%.

pages: 484 words: 136,735

Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis
by Anatole Kaletsky
Published 22 Jun 2010

Until 2005, the numbers behind what later came to be viewed as a malignant, cancerous growth of financial activity were actually moderate. The first big increase in consumer debt occurred around the world in the mid- 1980s, mostly the result of the abolition of oppressive restrictions on credit, such as America’s “Regulation Q”1 and Britain’s hire-purchase and foreign exchange controls.2 From 1983 and 1984 (when most of these regulations were lifted) and 1991, the ratio of U.S. household debt to disposable income increased by one-third, from 63 percent to 83 percent, as shown in Figure 7.1. It then stabilized at around this level for about a decade, before increasing again by about a third, from 83 percent of income in 1999 to 112 percent in 2005.

…

These regulations remained in effect until the Monetary Control Act of 1980 created the Depository Institutions Deregulation Committee with the express purpose of gradually dismantling them. R. Alton Gilbert, “Requiem for Regulation Q: What It Did and Why It Passed Away,” Federal Reserve Bank of St. Louis Review (February 1986): 22-37. 2 Britain imposed hire-purchase controls off and on from the late 1940s until 1982. Foreign exchange controls regulated foreign currency exchange, international trade and foreign investment in Britain from 1939 until 1979. See M. J. Artis and Mark P. Taylor, “Abolishing Exchange Control: The UK Experience,” Discussion Paper No. 294, Centre for Economic Policy Research (February 1989). 3 The FNMA thirty-year mortgage rate declined from 8.1 percent in 1999 to 5.8 percent in 2004 and to 6.2 percent in 2005.

The Economic Weapon
by Nicholas Mulder
Published 15 Mar 2021

This paranoia assumed greater proportions because of the many channels through which Germany was still materially dependent on the rest of the world: its external creditors, its imports of raw materials, and the capital of foreign investors.57 In June the regime declared a partial moratorium on foreign debt repayment while embarking on a racial purge of its leading economic sectors.58 To preserve its limited foreign exchange reserves, the Reich government began to restrict drastically the amount of money that could be taken out of Germany and placed its industrial chambers of commerce under state control.59 In August, bureaus for foreign exchange control (Stellen für Devisenbewirtschaftung) began to restrict German citizens’ purchases of tickets on foreign ocean liners, effectively instituting a state ban on using U.S. and British shipping companies.60 Germany’s first major step toward a break with the Versailles order came on 14 October 1933, when the failure of disarmament talks sent Hitler into a rage.

…

The Simon-Morgenthau exchange also gave occasion to the rather awkward discovery by the British of the American version of their own Trading with the Enemy Act, which Roosevelt had already used for domestic purposes in 1933. The British could not understand how an economic warfare law targeting property could be reapplied for purposes of foreign exchange control, and they were quite appalled by the suggestion (ibid., Note from Hopkins to S. D. Waley, Phillips, and Warren Fisher, 20 December 1937, ff. 41–42). Treasury Permanent Secretary R. V. N. Hopkins cautioned that “economic sanctions designed to hamper the nature of war are intensely provocative and I should think the Japs are the last people on which to try them unless [a] battle fleet is over there” (handwritten comment on memorandum by Sir Frederick Leith-Ross, 20 December 1937, f. 38). 185.

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Big Three in Economics: Adam Smith, Karl Marx, and John Maynard Keynes
by Mark Skousen
Published 22 Dec 2006

The other reason is the collapse of Marxist-inspired Soviet communism and the socialist central planning model in the early 1990s. Since then, globalization has opened the floodgates to freer economic policies, especially within developing countries. Nations that for decades engaged in systematic policies of nationalization, protectionism, import substitution, foreign exchange controls, and corporate cronyism have opened their borders to foreign investment, denationalization and privatization, deregulation, and other market policies. Even the World Bank, once a severe critic of the capitalist model, has shifted dramatically in favor of market solutions to underdevelopment problems (with some important exceptions).

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Financial Market Meltdown: Everything You Need to Know to Understand and Survive the Global Credit Crisis
by Kevin Mellyn
Published 30 Sep 2009

THE PITY OF WAR That question was soon answered by the First World War. The answer was: Government should regulate everything. With so-called war socialism in the Kaiser’s Germany as an unspoken model, Britain and the United States regulated wages, prices, interest rates, transportation—the whole shooting match. Foreign exchange controls were slapped on, trade embargoed, and the gold standard was suspended. This was the only way to mobilize the resources required to fight a ‘‘total war’’ involving tens of million of combatants. It was full of absurdities and glitches, but it was tolerable for a few years. Above all, it was seen to be fair.

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The Long Good Buy: Analysing Cycles in Markets
by Peter Oppenheimer
Published 3 May 2020

Since then, many things in economies and society have changed beyond recognition. The world has become more interconnected; the Cold War ended and the Soviet Empire unravelled, heralding an era of ‘globalisation’. When I began my career, the UK had only recently, in 1979, removed restrictions on foreign exchange controls (for the first time in 90 years), while France and Italy still had them in place, only abolishing them in 1990.1 Economic conditions have also transformed, and several key fundamental macro drivers have shifted dramatically: over the past three decades, inflation has fallen persistently and interest rates have collapsed; 10-year government bond yields in the United States have come down from over 11% to 2%, Fed funds rates have fallen from over 8% to 1.5% and currently one-quarter of all government bonds globally have a negative yield.

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The Money Machine: How the City Works
by Philip Coggan
Published 1 Jul 2009

That system, generally known as Bretton Woods, combined fixed exchange rates with strict controls on capital flows, so restricting the scope for financial market activity. Under fixed exchange rates, currency speculation was only profitable at occasional times, such as when Britain was forced to devalue sterling in 1967. Foreign-exchange controls also made it difficult for investors to buy equities outside their home markets. That reduced the scope for share trading and ensured that the UK equity market was a protected haven, dominated by small firms operating in a climate which author Philip Augar has described as ‘gentlemanly capitalism’.

pages: 309 words: 85,584

Nine Crises: Fifty Years of Covering the British Economy From Devaluation to Brexit
by William Keegan
Published 24 Jan 2019

He puts a historical finger on it when concluding that all this was ‘a product of the neoliberal culture of the time that talked about better regulation but in fact favoured even more deregulation’. Although I have referred above to proximate causes and the Thucydidean ‘truest cause’, there were indeed historical factors contributing to this neoliberal culture. In the UK, these began with the way that Bank officials noticed after the removal of foreign exchange controls in 1979 that most of the subsequent trade was being conducted by foreign banks. They thought, in what turned out to be their naivety, that opening up the City and exposing it to greater competition from overseas financial institutions would somehow strengthen the City’s traditional institutions.

pages: 561 words: 87,892

Losing Control: The Emerging Threats to Western Prosperity
by Stephen D. King
Published 14 Jun 2010

At approaching 100 per cent of US national income, this was a huge legacy of the military expenditures associated with the Second World War. Almost all this debt was funded by Americans who were happy to lend to their government. Less than 2 per cent of the total was funded by foreigners, partly because of a wave of capital and foreign-exchange controls throughout the world. By 2008, US government debt had risen to $9.6trn. As a share of national income, this stood at 68 per cent, lower than the immediate post-war extremes but, nevertheless, a sizeable increase compared with the 1981 trough of 33 per cent. Foreign participation had grown hugely.

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The Marshall Plan: Dawn of the Cold War
by Benn Steil
Published 13 Feb 2018

., 213, 219–20, 258, 282, 295, 301–2, 317, 413 elections, West Germany, 79–80, 236–37, 240, 254, 303–4, 335–37, 379, 381, 382 electricity, 324, 344 Elsey, George, 41, 42, 43–44, 220, 414 Erdoğan, Recep Tayyip, 392, 395, 414 Erhard, Ludwig, 274–75, 335, 361, 365, 414 Ertegün, Mehmet Münir, 24 espionage, 79, 241, 268–69, 277, 279, 282, 283, 284, 298, 319 Estonia, 73, 400, 401 Ethridge, Mark, 26, 414 Eurocommunism, 180–89, 191, 193–94, 210, 227–28, 315, 353 Europe, Eastern: Cominform programs for, 180, 182, 184, 185–86, 235–36, 257, 349, 371 Iron Curtain division of, 10, 83, 102, 109, 121, 189, 194, 212, 259, 378, 411 Marshall Plan rejected by, 135–45, 146, 235–45 Soviet domination of, 23, 70, 80–81, 82, 91, 108, 123, 138, 236–37, 242–44, 250–51, 259, 278, 324, 370–72, 390 Stalin’s policies on, 23, 70, 79, 80–81, 82, 91, 108, 123, 138, 236–37, 242–44, 250–51, 259, 278, 324, 335–36, 337, 370–72, 390 Warsaw Pact countries in, 275, 277, 379, 383–84, 387, 392, 393, 399 Europe, Western: banking sector in, 221, 269, 285, 286, 348, 358 capitalism in, x, 10, 16–17, 57, 60, 73, 82, 100, 123, 126, 132, 138, 179, 186, 187–88, 209, 239, 275, 330–31, 335, 359, 386, 393, 520n communist parties in, 19–20, 180–89, 191, 193–94, 210, 227–28, 315, 353 consumer spending in, 95, 151, 158, 166, 186–97 credit support in, 11, 76–77, 106–7, 108, 121, 154, 362 currency reform in, 153–55, 159, 161, 220, 255, 270–72, 281, 285, 304, 307–8, 355, 358, 360–61, 367 customs barriers in, 66, 100–101 customs union for, 159, 162, 165, 173–74, 379; see also Benelux deficits in, 21, 61, 161–62, 358–59, 362, 446–49, 570n democracy in, 4, 8, 36, 37, 60, 105, 119, 126, 142, 180, 182, 192, 194, 197, 206, 229, 242–44, 256, 258, 259, 282, 335, 336, 359, 369, 392, 393, 395, 396, 400 dictatorships in, 29, 61, 71, 248, 503n–4n dollar reserves of, 21, 22, 94, 95, 107, 154, 155, 161, 162, 165, 167, 170, 173, 186, 216, 220, 224, 227, 314, 344, 345, 347–48, 357, 363–64, 368, 370 exports of, 62, 67, 86, 105, 106–7, 153–54, 161, 168, 216, 221, 257, 263, 309, 331–32, 363–64, 369–70 food supplies in, 7, 64, 67, 68, 94, 106, 159, 161, 167, 190, 263, 272, 274, 279, 302, 307, 310, 342, 346, 353, 359, 361, 366–67, 369 foreign exchange controls for, 68, 140, 154, 165, 167, 172, 270–71, 344–45 free markets in, ix, 88, 100–101, 106–7, 158, 167–68, 185–97, 243, 330, 331–47, 348, 360, 369, 374, 402 gold reserves of, ix, 21, 26, 94, 95, 101, 154, 161, 216, 227, 344, 363 gross domestic product (GDP) of, 81, 86, 197, 342, 343, 348, 354, 358, 446–49 gross national product (GNP) of, 342, 351–52, 358 imports of, 62–63, 64, 81, 95, 153–54, 161, 216, 220, 314, 344, 355, 364, 369–70 Iron Curtain division and, 10, 83, 102, 109, 121, 189, 194, 212, 259, 378, 411 living standards in, 61, 65, 107, 162, 166, 168, 174, 221, 341, 359, 368 maps of, 42–43, 101, 177, 296, 456–60 Marshall Plan supported by, 118–19, 122, 126–28, 130, 132–33, 145, 146–60, 176, 189–91, 202–10, 214, 227–28, 305–7, 313–14, 326–28, 331–32, 352–54, 362–65 military security for, x, 33–34, 44, 150, 280, 302, 318–22, 325, 327, 335, 356, 369, 371, 373, 375, 379, 380–84, 385, 387–403, 415, 574n, 577n nationalism in, 79, 81, 181, 195, 310, 326, 336, 387, 400 political map (1943) for, 458 political map (1949) for, 459 price controls in, 168, 220, 221, 270, 307, 346, 361 production in, 77, 81–82, 94–95, 163, 168–69, 174, 366 protectionism in, 51, 66, 88, 100–101, 155–56, 158–59, 167–68, 172, 216, 223, 306, 363–65, 369 revolutionary violence in, 186–89 tariffs in, 51, 100, 158–59, 165, 223, 314, 401 totalitarianism in, 29, 61, 71, 89, 190–91, 212, 214, 248, 276, 503n–4n trade deficits in, 67–68, 70, 140, 141, 154, 173, 221, 307, 358, 362–65, 369–70 European Coal and Steel Community (ECSC), 153, 322 European Community (EC), 381, 387 European Economic Commission, 118, 174 European Economic Community (Common Market), 153, 188, 322 “European Group,” 227 European Payments Union (EPU), 154–55, 348, 362, 363, 364, 366, 572n European Recovery Program (ERP), see Marshall Plan European Union (EU), x, 322, 373, 375, 380–81, 384, 391, 393, 395–96, 401–3, 577n Export-Import Bank, U.S., 244, 568n–69n exports, 62, 67, 86, 105, 106–7, 153–54, 161, 168, 216, 221, 257, 263, 309, 331–32, 363–64, 369–70 Extraordinary Peoples’ Courts, 16 factories, 94–95 Falin, Valentin, 380–81 Farewell Address (Washington), 1, 3, 13, 27, 43, 97, 320 fascism, 2, 16, 80, 181, 184, 350 Federal Bureau of Investigation (FBI), 232 federalization, 80, 131, 169, 249 Federal Reserve System, 220, 221 Feierabend, Ladislav, 143, 414 Ferguson, Homer, 192, 415 Fifteen Weeks, The (Jones), 32, 418 fifth columns, 371 Finland, 2–3, 7, 19, 126, 148, 244–45, 251, 252, 395 first-charge principle, 64, 67 food supplies, 7, 64, 67, 68, 94, 106, 159, 161, 167, 190, 263, 272, 274, 279, 302, 307, 310, 342, 346, 353, 359, 361, 366–67, 369 see also starvation Foreign Affairs, 30–32, 43, 90–91, 198–99, 255–56, 326, 328, 395 Foreign Assistance Act (1948), 260, 568n–69n see also Marshall Plan “foreign entanglements,” 1, 3, 13, 27, 43, 97, 320 foreign exchange controls, 68, 140, 154, 165, 167, 172, 270–71, 344–45 Foreign Office, British, 125, 127, 158, 230 Foreign Policy Concept (FPC), 394–95, 401 foreign trade, 20, 22, 88, 124, 135, 149, 153–55, 269–70, 313, 325, 368 Forrestal, James, 30, 33, 87, 92, 214, 230, 316–17, 415 Four Power (Quadripartite) agreement, 95, 208, 273, 286, 288, 290–91, 308, 310, 323, 329–33, 361, 379–80 Fourteen Points, 88 France, 2, 10, 16, 18–20, 35, 47, 51, 61, 66–69, 94, 100, 101, 106, 108, 118, 121–23, 129, 131–33, 136, 140, 141, 147–53, 155, 161–64, 170, 175, 176, 181–91, 201, 203, 210, 211, 216, 221, 227, 230, 240, 249–55, 263, 295, 315, 318, 320, 322, 336, 342–56, 360–68, 374, 386, 403 Franco, Francisco, 148, 260 François-Poncet, André, 335–36, 415 Frankfurt, 106, 206, 272 Franklin, Benjamin, 340, 566n Franks, Oliver, 148, 155, 156, 159, 162, 168, 169, 170, 171, 172, 314, 415 Free Democratic Party (FDP), 304, 335 free markets, ix, 88, 100–101, 106–7, 158, 167–68, 185–97, 243, 330, 331–47, 348, 360, 369, 374, 402 French Communist Party, 66, 108, 121, 130, 170, 181–82, 185–88, 216–17, 230, 271, 349–51, 353, 355–56 French zone, 65, 66–67, 68, 69, 82, 249, 321, 542n Friedensburg, Ferdinand, 290, 310, 415 Gaddis, John Lewis, 375, 415 Gaidar, Yegor, 400, 415 Ganeval, Jean, 274, 279, 415 Gaullism, 64, 122, 271, 350–51, 353, 355–56 General Agreement on Tariffs and Trade (GATT), 172, 370 Geneva talks, 165–66 Genscher, Hans-Dietrich, 378, 415 George VI, King of England, 97, 124, 125 Georgia, 23–24, 72, 396–97, 398, 399, 402 Gerashchenko, Vladimir, 157, 194, 415 German Communist Party (Kommunistische Partei Deutschlands) (KPD), 75–76, 79, 80, 204 Germany, East: communist control of, 75–76, 79, 80, 204 as German Democratic Republic (GDR), 336–37 postwar conditions in, 7–8 Soviet troops in, 237, 382–84 Stalin’s policies on, 79, 324, 335–36, 337, 372 Volksrat (People’s Council) of, 336 see also Berlin, East Germany, Nazi, 18, 27, 34, 39, 47, 60, 73, 79, 80–81, 188, 215, 238, 242, 270, 276, 278, 358, 386 Germany, Occupied: Bizonia area in, 60, 68, 69, 76, 105–6, 149, 151, 153, 203, 206, 207, 208, 249, 274–75 British zone of, 18, 62, 65, 68, 208, 360–61 currency convertibility in, 22, 161–62, 165, 168, 269–70, 364–65, 382–83 deindustrialization of, 6, 8–9, 66, 81–82, 150–51, 152 demilitarization of, 75, 76, 281, 316 de-Nazification of, 80–81, 106, 161 federalization of, 80, 131, 169, 249 Four Power agreement for, 95, 208, 273, 286, 288, 290–91, 308, 310, 323, 329–33, 361, 379–80 French zone of, 65, 66–67, 68, 69, 82, 249, 321, 542n goods and services in, 95, 154, 158, 159, 325, 331–32, 342, 346, 349, 357, 361, 364, 370, 382 humanitarian crisis in, 87, 94–96, 189–90, 227, 277 industrial production of, 62, 68, 82, 105–7, 149, 151, 159, 160–62, 167, 176–84, 187, 189–90, 203, 211, 249, 255, 303, 304, 329–30, 341–42, 357, 359–61, 367, 374 map of, 457 military governors of, 64–65, 68, 89, 103–7, 134, 151–52, 203, 206–7, 270–75, 278, 282, 287–90, 302, 307–8, 321–25, 334, 357, 359–60, 367, 372 Morgenthau Plan for, 6, 8–9, 89, 90, 96, 99, 104–5, 115, 149, 151, 183, 209, 225–26, 357, 424 occupation zones in, 4, 63–64, 70, 457; see also specific zones pastoralization of, x, 66, 89, 115, 149, 161 reparations policy for, 4, 6–7, 60–71, 75–79, 85, 107, 109, 123, 128, 131, 176, 203–6, 249, 266, 276, 281, 310, 313, 325, 330, 331, 337, 356–58, 361, 362, 368 reunification of, 209, 326, 377–78, 379, 381, 382, 419, 427, 430, 557, 562, 570n Rhine region of, 82, 103, 252 Saar region of, 62, 66–67, 69, 150, 322, 356 Soviet zone of, 20, 79–81, 228, 270, 271, 272, 275, 280, 281–82, 285, 329–30, 336 starvation in, 15, 18, 89, 95, 99–100, 105, 170, 208–9, 244, 245, 275, 358 trade in, 20, 22, 88, 124, 135, 149, 153–55, 269–70, 313, 325, 368 U.S. zone of, 64–65, 68, 89–90, 104, 209, 270, 286, 308, 329–30, 360–61 war damage in, 342, 344, 357 winter conditions in (1947), 346, 569n–70n Germany, West: Acheson’s policies on, 298, 311, 312, 322, 326, 328, 332–34, 336 Basic Law (Grundgesetz) in, 329, 381 Bonn constitutional convention (1948) for, 289, 292, 322, 323, 330, 331 Bonn government of, 322, 325, 329 currency of (deutschmark) (DM), 22, 161–62, 165, 168, 269–76, 278, 279, 283–85, 286, 287, 288, 289, 292, 307–8, 311, 312, 325, 330, 358, 360–65, 382–84 elections in, 79–80, 236–37, 240, 254, 303–4, 335–37, 379, 381, 382 reconstruction of, 51, 118–19, 140–41, 149–50, 206–10, 313–14, 336, 357–62, 378–79 see also Berlin, West Geschke, Ottomar, 303, 415 Gibbon, Edward, 328 Gilbert, Charles, 200, 415 gold reserves, ix, 21, 26, 94, 95, 101, 154, 161, 216, 227, 344, 363 Gomułka, Władysław, 185, 415 goods and services, 95, 154, 158, 159, 325, 331–32, 342, 346, 349, 357, 361, 364, 370, 382 Gorbachev, Mikhail, 378, 379, 381–82, 383, 387, 388, 391, 392, 397, 415 Gore, Al, 374, 416 Gottwald, Klement, 138, 139, 142, 143, 237, 238–39, 240, 242, 244, 266, 416 Grachev, Pavel, 387, 416 grain supplies, 170, 237, 243–44, 298, 353 Grand Alliance, 29 Grand Strategy, 403–4 Great Britain, 2, 3, 10, 11, 19–26, 35–39, 47, 51, 62, 63, 74, 76, 81, 85, 89, 94, 97, 99, 101, 106, 123–32, 136, 140, 149, 155, 159, 161–73, 190, 222, 227, 235, 249, 251, 255, 267, 282, 307, 345, 348, 349, 360, 363, 367, 368, 386, 403 Great Depression, 51 Great Powers, 141, 175–76 Greece, 16, 18–19, 21, 22, 26, 31–39, 40, 42, 44–52, 87, 94, 147, 156–57, 160, 166, 175, 185, 213, 245, 259–60, 266, 269, 342, 343, 374, 509n Griffis, Stanton, 137, 416 Gromyko, Andrei, 10, 49, 125, 267–69, 333, 400, 416 gross domestic product (GDP), 81, 86, 197, 342, 343, 348, 354, 358, 446–49 gross national product (GNP), 342, 351–52, 358 Grotewohl, Otto, 80, 336–37, 416 Grundgesetz (Basic Law), 329, 381 guerrilla movements, 48 Haffner, Sebastian, 175, 416 Hála, František, 144, 416 Hall, Alvin, 270, 416 Halle, Louis, Jr., 321, 386, 416 Halleck, Charles, 192, 416 Halvorsen, Gail, 302, 416 Hamilton, Alexander, 27 Harding, Warren G., 88 Harriman, W.

…

., 244, 568n–69n exports, 62, 67, 86, 105, 106–7, 153–54, 161, 168, 216, 221, 257, 263, 309, 331–32, 363–64, 369–70 Extraordinary Peoples’ Courts, 16 factories, 94–95 Falin, Valentin, 380–81 Farewell Address (Washington), 1, 3, 13, 27, 43, 97, 320 fascism, 2, 16, 80, 181, 184, 350 Federal Bureau of Investigation (FBI), 232 federalization, 80, 131, 169, 249 Federal Reserve System, 220, 221 Feierabend, Ladislav, 143, 414 Ferguson, Homer, 192, 415 Fifteen Weeks, The (Jones), 32, 418 fifth columns, 371 Finland, 2–3, 7, 19, 126, 148, 244–45, 251, 252, 395 first-charge principle, 64, 67 food supplies, 7, 64, 67, 68, 94, 106, 159, 161, 167, 190, 263, 272, 274, 279, 302, 307, 310, 342, 346, 353, 359, 361, 366–67, 369 see also starvation Foreign Affairs, 30–32, 43, 90–91, 198–99, 255–56, 326, 328, 395 Foreign Assistance Act (1948), 260, 568n–69n see also Marshall Plan “foreign entanglements,” 1, 3, 13, 27, 43, 97, 320 foreign exchange controls, 68, 140, 154, 165, 167, 172, 270–71, 344–45 Foreign Office, British, 125, 127, 158, 230 Foreign Policy Concept (FPC), 394–95, 401 foreign trade, 20, 22, 88, 124, 135, 149, 153–55, 269–70, 313, 325, 368 Forrestal, James, 30, 33, 87, 92, 214, 230, 316–17, 415 Four Power (Quadripartite) agreement, 95, 208, 273, 286, 288, 290–91, 308, 310, 323, 329–33, 361, 379–80 Fourteen Points, 88 France, 2, 10, 16, 18–20, 35, 47, 51, 61, 66–69, 94, 100, 101, 106, 108, 118, 121–23, 129, 131–33, 136, 140, 141, 147–53, 155, 161–64, 170, 175, 176, 181–91, 201, 203, 210, 211, 216, 221, 227, 230, 240, 249–55, 263, 295, 315, 318, 320, 322, 336, 342–56, 360–68, 374, 386, 403 Franco, Francisco, 148, 260 François-Poncet, André, 335–36, 415 Frankfurt, 106, 206, 272 Franklin, Benjamin, 340, 566n Franks, Oliver, 148, 155, 156, 159, 162, 168, 169, 170, 171, 172, 314, 415 Free Democratic Party (FDP), 304, 335 free markets, ix, 88, 100–101, 106–7, 158, 167–68, 185–97, 243, 330, 331–47, 348, 360, 369, 374, 402 French Communist Party, 66, 108, 121, 130, 170, 181–82, 185–88, 216–17, 230, 271, 349–51, 353, 355–56 French zone, 65, 66–67, 68, 69, 82, 249, 321, 542n Friedensburg, Ferdinand, 290, 310, 415 Gaddis, John Lewis, 375, 415 Gaidar, Yegor, 400, 415 Ganeval, Jean, 274, 279, 415 Gaullism, 64, 122, 271, 350–51, 353, 355–56 General Agreement on Tariffs and Trade (GATT), 172, 370 Geneva talks, 165–66 Genscher, Hans-Dietrich, 378, 415 George VI, King of England, 97, 124, 125 Georgia, 23–24, 72, 396–97, 398, 399, 402 Gerashchenko, Vladimir, 157, 194, 415 German Communist Party (Kommunistische Partei Deutschlands) (KPD), 75–76, 79, 80, 204 Germany, East: communist control of, 75–76, 79, 80, 204 as German Democratic Republic (GDR), 336–37 postwar conditions in, 7–8 Soviet troops in, 237, 382–84 Stalin’s policies on, 79, 324, 335–36, 337, 372 Volksrat (People’s Council) of, 336 see also Berlin, East Germany, Nazi, 18, 27, 34, 39, 47, 60, 73, 79, 80–81, 188, 215, 238, 242, 270, 276, 278, 358, 386 Germany, Occupied: Bizonia area in, 60, 68, 69, 76, 105–6, 149, 151, 153, 203, 206, 207, 208, 249, 274–75 British zone of, 18, 62, 65, 68, 208, 360–61 currency convertibility in, 22, 161–62, 165, 168, 269–70, 364–65, 382–83 deindustrialization of, 6, 8–9, 66, 81–82, 150–51, 152 demilitarization of, 75, 76, 281, 316 de-Nazification of, 80–81, 106, 161 federalization of, 80, 131, 169, 249 Four Power agreement for, 95, 208, 273, 286, 288, 290–91, 308, 310, 323, 329–33, 361, 379–80 French zone of, 65, 66–67, 68, 69, 82, 249, 321, 542n goods and services in, 95, 154, 158, 159, 325, 331–32, 342, 346, 349, 357, 361, 364, 370, 382 humanitarian crisis in, 87, 94–96, 189–90, 227, 277 industrial production of, 62, 68, 82, 105–7, 149, 151, 159, 160–62, 167, 176–84, 187, 189–90, 203, 211, 249, 255, 303, 304, 329–30, 341–42, 357, 359–61, 367, 374 map of, 457 military governors of, 64–65, 68, 89, 103–7, 134, 151–52, 203, 206–7, 270–75, 278, 282, 287–90, 302, 307–8, 321–25, 334, 357, 359–60, 367, 372 Morgenthau Plan for, 6, 8–9, 89, 90, 96, 99, 104–5, 115, 149, 151, 183, 209, 225–26, 357, 424 occupation zones in, 4, 63–64, 70, 457; see also specific zones pastoralization of, x, 66, 89, 115, 149, 161 reparations policy for, 4, 6–7, 60–71, 75–79, 85, 107, 109, 123, 128, 131, 176, 203–6, 249, 266, 276, 281, 310, 313, 325, 330, 331, 337, 356–58, 361, 362, 368 reunification of, 209, 326, 377–78, 379, 381, 382, 419, 427, 430, 557, 562, 570n Rhine region of, 82, 103, 252 Saar region of, 62, 66–67, 69, 150, 322, 356 Soviet zone of, 20, 79–81, 228, 270, 271, 272, 275, 280, 281–82, 285, 329–30, 336 starvation in, 15, 18, 89, 95, 99–100, 105, 170, 208–9, 244, 245, 275, 358 trade in, 20, 22, 88, 124, 135, 149, 153–55, 269–70, 313, 325, 368 U.S. zone of, 64–65, 68, 89–90, 104, 209, 270, 286, 308, 329–30, 360–61 war damage in, 342, 344, 357 winter conditions in (1947), 346, 569n–70n Germany, West: Acheson’s policies on, 298, 311, 312, 322, 326, 328, 332–34, 336 Basic Law (Grundgesetz) in, 329, 381 Bonn constitutional convention (1948) for, 289, 292, 322, 323, 330, 331 Bonn government of, 322, 325, 329 currency of (deutschmark) (DM), 22, 161–62, 165, 168, 269–76, 278, 279, 283–85, 286, 287, 288, 289, 292, 307–8, 311, 312, 325, 330, 358, 360–65, 382–84 elections in, 79–80, 236–37, 240, 254, 303–4, 335–37, 379, 381, 382 reconstruction of, 51, 118–19, 140–41, 149–50, 206–10, 313–14, 336, 357–62, 378–79 see also Berlin, West Geschke, Ottomar, 303, 415 Gibbon, Edward, 328 Gilbert, Charles, 200, 415 gold reserves, ix, 21, 26, 94, 95, 101, 154, 161, 216, 227, 344, 363 Gomułka, Władysław, 185, 415 goods and services, 95, 154, 158, 159, 325, 331–32, 342, 346, 349, 357, 361, 364, 370, 382 Gorbachev, Mikhail, 378, 379, 381–82, 383, 387, 388, 391, 392, 397, 415 Gore, Al, 374, 416 Gottwald, Klement, 138, 139, 142, 143, 237, 238–39, 240, 242, 244, 266, 416 Grachev, Pavel, 387, 416 grain supplies, 170, 237, 243–44, 298, 353 Grand Alliance, 29 Grand Strategy, 403–4 Great Britain, 2, 3, 10, 11, 19–26, 35–39, 47, 51, 62, 63, 74, 76, 81, 85, 89, 94, 97, 99, 101, 106, 123–32, 136, 140, 149, 155, 159, 161–73, 190, 222, 227, 235, 249, 251, 255, 267, 282, 307, 345, 348, 349, 360, 363, 367, 368, 386, 403 Great Depression, 51 Great Powers, 141, 175–76 Greece, 16, 18–19, 21, 22, 26, 31–39, 40, 42, 44–52, 87, 94, 147, 156–57, 160, 166, 175, 185, 213, 245, 259–60, 266, 269, 342, 343, 374, 509n Griffis, Stanton, 137, 416 Gromyko, Andrei, 10, 49, 125, 267–69, 333, 400, 416 gross domestic product (GDP), 81, 86, 197, 342, 343, 348, 354, 358, 446–49 gross national product (GNP), 342, 351–52, 358 Grotewohl, Otto, 80, 336–37, 416 Grundgesetz (Basic Law), 329, 381 guerrilla movements, 48 Haffner, Sebastian, 175, 416 Hála, František, 144, 416 Hall, Alvin, 270, 416 Halle, Louis, Jr., 321, 386, 416 Halleck, Charles, 192, 416 Halvorsen, Gail, 302, 416 Hamilton, Alexander, 27 Harding, Warren G., 88 Harriman, W.

pages: 309 words: 95,495

Foolproof: Why Safety Can Be Dangerous and How Danger Makes Us Safe
by Greg Ip
Published 12 Oct 2015

In 1931 it left gold, and the pound immediately fell about 25 percent against the dollar. The decline in the British exchange rate allowed it to restore competitiveness and to lower interest rates, which boosted demand. It also forced many of its trading partners to devalue; those that didn’t devalue imposed foreign exchange controls or raised tariffs. Economists now know that adherence to gold was a major contributor to the Great Depression. To maintain their parities, adherents were forced to keep interest rates higher and budgets balanced, which only tightened the vise on their domestic economies. Countries that abandoned gold escaped that vise and recovered much more quickly.

pages: 312 words: 93,836

Barometer of Fear: An Insider's Account of Rogue Trading and the Greatest Banking Scandal in History
by Alexis Stenfors
Published 14 May 2017

However, the key driver of the Eurodollar market was financial regulation – or, more specifically, the banks’ determination to avoid it. Money markets were heavily regulated at the time, particularly in the US, making a strong case for setting up a US dollar money market outside the jurisdiction and scrutiny of the Federal Reserve and other US authorities.8 This also coincided with the end of the foreign exchange controls that had existed in Western Europe. With the Eurocurrency market, a free, competitive and global money market was beginning to take shape for the first time. A platform for engaging in regulatory arbitrage was formed, and European banks jumped at the opportunity to exploit loopholes in different jurisdictions.

pages: 357 words: 99,684

Why It's Still Kicking Off Everywhere: The New Global Revolutions
by Paul Mason
Published 30 Sep 2013

Probably the only thing they could agree on with the Tea Party was that. But trade wars, whether driven by left, right or centre, have a negative logic that can escape the intentions of the participants. As Charles Kindleberger’s masterly account of the Depression showed, ‘by advancing its own economic good by a tariff, currency depreciation or foreign exchange control, a country may worsen the welfare of its partners by more than its own gain … so that each country ends up in a worse position’.24 Kindleberger concluded that only a hegemonic power could hold things together in this situation; a country prepared to absorb unwanted produce, accept IOUs from everybody and maintain the flow of investment capital as it dried up elsewhere.

pages: 352 words: 98,561

The City
by Tony Norfield

For example, the value of outstanding international bank loans rose by two-thirds between 1977 and 1979 to exceed $1,000bn, and it was in the 1970s that major US exchanges began trading in financial futures contracts on US government bonds and currencies.22 By 1979, the euromarkets had also already passed their teenage years. Nevertheless, 1979 is a useful starting point for discussing two significant policies affecting the UK financial markets: the abolition of foreign exchange controls and the ‘Big Bang’ reform of the London Stock Exchange. One of the first moves of the incoming UK Conservative government in 1979 was to abolish the existing controls on foreign exchange markets. It was able to do so with little risk of a collapse of sterling’s exchange value because the UK’s North Sea oil production and net exports had begun to increase sharply.

pages: 431 words: 107,868

The Great Race: The Global Quest for the Car of the Future
by Levi Tillemann
Published 20 Jan 2015

When MITI regained control over the auto sector it quickly instituted “the virtual equivalent of an import ban.”36 Severe tariffs were levied on foreign imports in 1951, and the heaviest taxes focused on larger vehicles—most of which happened to be American. This pushed Japanese consumers toward smaller cars, as did a series of foreign exchange controls that dictated what technologies Japan’s companies could import.37 The clear aim was to protect the Japanese auto market from American imports. Go West At the same time as MITI was busy kicking out American automakers from its domestic market, it was also eyeing U.S. markets—with a particular focus on California.38 Japan wanted to export, but to do this, Japanese manufacturers would need to meet global standards.

pages: 438 words: 109,306

Tower of Basel: The Shadowy History of the Secret Bank That Runs the World
by Adam Lebor
Published 28 May 2013

Bilateral payments must be transformed into multilateral economic transactions and clearing arrangements, “so that the various countries may enter into properly regulated economic relations with one another through the intermediary of clearing arrangements of this kind”—just as happened with the 1947 Paris agreement on multilateral payments and its successor mechanisms, such as the European Payments Union (EPU). Foreign exchange controls could not be abolished in one move or monetary union quickly introduced. The process must be incremental, Funk argued, anticipating the need for a halfway system like the EPU, which liberated non-residents from exchange controls, although they remained in place for citizens. “The problem is not one of free exchange or European monetary union, but in the first place, of a further development of clearing techniques for the purpose of ensuring a smooth course for payments within the countries participating in the clearing.”

pages: 368 words: 32,950

How the City Really Works: The Definitive Guide to Money and Investing in London's Square Mile
by Alexander Davidson
Published 1 Apr 2008

By 1900, London had become the world’s largest banking centre with about 250 private and joint stock banks. During the First World War, the banking business expanded in size and scope. Banks, however, were subsequently hit by poor interwar trading conditions. During the Second World War, banks became subject to foreign exchange controls and lending priorities. In the 1950s, these were relaxed and banks expanded. In the 1970s, the government encouraged more active competition. From a comparatively few conglomerates, banks moved towards the broad provision of financial services that we have today. We have come a long way from the Victorian era when many small banks had provided limited facilities for a wealthy minority.

pages: 355 words: 63

The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics
by William R. Easterly
Published 1 Aug 2002

Daewoo explained to Desh how to use the system and advised the Bangladeshi government how to administer the scheme efficiently. Daewoo and Desh also explained to local Bangladeshi banks how to open back-to-back import letters of credit. They figured out how to get the government to go along with such back-to-back import letters of credit under the government’s strict foreign exchange controls. A financing firm called Empire Capital GroupInc. from California gives the following simple explanation of back-to-back import letters of credit: We can arrange back-to-back letters of credit when the intermediary desires the producer and thebuyer be kept apart for competitive reasons and at the same time insuring payment to the respective parties.

pages: 397 words: 112,034

What's Next?: Unconventional Wisdom on the Future of the World Economy
by David Hale and Lyric Hughes Hale
Published 23 May 2011

In terms of its government debt market, China’s government and central bank bond market combined is still relatively small, with approximately $1.4 trillion outstanding in 2008, of which about half (mainly the central bank’s sterilization issuance) was short term. Fiscal policy has generally been conservative, and the debt-to-GDP ratio is low, but the Chinese capital markets, including those for government securities, are still underdeveloped. Liquidity among domestic holders is limited as most purchasers hold until maturity. Foreign exchange controls mean that, other than for tourists’ needs, the RMB is only available on a very limited basis to nonresidents. Access to domestic, onshore RMB equity and debt markets by foreigners or by foreign entities is subject to qualified foreign institutional investors quotas, while onshore RMB deposit accounts at banks are simply not available to nonresidents.

pages: 376 words: 118,542

Free to Choose: A Personal Statement
by Milton Friedman and Rose D. Friedman
Published 2 Jan 1980

Some areas of production are reserved to government; in others private firms are permitted to operate, but only in conformity with The Plan. Tariffs and quotas control imports, subsidies control exports. Self-sufficiency is the ideal. Needless to say, these measures produce shortages of foreign exchange. These are met by detailed and extensive foreign exchange control—a major source both of inefficiency and of special privilege. Wages and prices are controlled. A government permit is required to build a factory or to make any other investment. Taxes are ubiquitous, highly graduated on paper, evaded in practice. Smuggling, black markets, illegal transactions of all kinds are every bit as ubiquitous as taxes, undermining all respect for law, yet performing a valuable social service by offsetting to some extent the rigidity of central planning and making it possible for urgent needs to be satisfied.

pages: 366 words: 117,875

Arrival City
by Doug Saunders
Published 22 Mar 2011

Most tellingly, social inequality actually increased during the years of the revolution, according to the regime’s own estimates.‡ It has been described as a process of “hollow growth”: Even though the oil-dominated economy grew by 9 percent each year in Chávez’s first decade, it failed to create jobs, and half of Venezuela’s factories closed their doors between 1998 and 2008, mainly because price and foreign-exchange controls made it impossible to do business. That view was reinforced by Edmond Saade, a generally regime-supporting scholar who runs the Caracas-based Datos research firm. He realized, a few years into the regime, that the money spilling into the arrival cities of Caracas was leaving no lasting effect.

pages: 403 words: 125,659

It's Our Turn to Eat
by Michela Wrong
Published 9 Apr 2009

A 1970–71 parliamentary commission helpfully authorised government employees to run their own businesses while holding down civil service jobs (‘straddling’, as it was called), a ruling its chairman later justified on the grounds that there was no point banning an activity that would persist whatever the law decreed.13 A post in a state-run utility or corporation, which could hike prices ever upwards thanks to its monopoly position, offered untold profit-taking opportunities. Similarly, who was better placed to benefit from foreign exchange controls which created a yawning gap between black market and official rates than an insider with excellent banking and Treasury contacts? The structural adjustment programmes pushed on Africa by the World Bank and the International Monetary Fund in the 1980s, which loosened the Kenyan government's stranglehold by making aid conditional on privatising bloated parastatals, dropping currency controls and opening markets to international trade, complicated things, but the ‘eaters’ quickly vaulted that hurdle.

pages: 413 words: 128,093

On the Grand Trunk Road: A Journey Into South Asia
by Steve Coll
Published 29 Mar 2009

The family industries Sharif built were constructed during a period of oppression and corruption. In person, he comes off as a bit befuddled. Despite these and other limitations, as well as the chronic maladies of Pakistan’s divided polity, the economy has kicked out briskly under Sharif’s spur. The prime minister abolished foreign exchange controls and many customs restrictions and he proudly declared that Pakistan should now be considered one giant airport green channel. The country’s well-developed class of heroin smugglers and gunrunners, among others, are responding vigorously. “Our policy today is whoever wants to invest in Pakistan, whether Pakistani or foreigner, doesn’t have to seek permission from the government.

pages: 457 words: 143,967

The Bank That Lived a Little: Barclays in the Age of the Very Free Market
by Philip Augar
Published 4 Jul 2018

As he navigated the corridors connecting Barclays Merchant Bank offices in Gracechurch Street with Barclays’ imposing head office at 54 Lombard Street, he was wary. Bevan currently had a lot of problems to deal with. When he had taken over from Tuke – who remained on the board as a non-executive director – another wave of banking deregulation was already underway. It had begun immediately after the general election in 1979. The abolition of foreign exchange controls under the new prime minister, Margaret Thatcher, and chancellor of the exchequer, Geoffrey Howe, allowed British institutions to invest more easily overseas and made London a more attractive place for foreign banks, but that meant more competition for Barclays. The emergency corset restraint on bank lending imposed in 1973 was ended in 1980 and the year after that, in Bevan’s first year, the Bank of England further eased controls on banks’ balance sheets.

The Cleaner: The True Story of One of the World's Most Successful Money Launderers
by Bruce Aitken
Published 2 Mar 2017

The receptionist noticed me immediately, and a feeling of intense suspense permeated the lobby right before I was whisked back toward the vault. As we walked, I could hear whispering: “Deak & Company has arrived. They have another deposit of repatriated Aussie dollars collected from Aussie tourists and travelers.” Yet another illusion created to avoid a world of draconian foreign exchange controls. Right away there is small talk, suspicions at times, about the flight, what time I arrived, whether or not I had encountered any problems with the customs. All of this, of course, was a cunning ruse, a clever ploy, so I quickly changed the subject to rugby, and asked where everyone would like to go to lunch and have a few beers.

pages: 464 words: 139,088

The End of Alchemy: Money, Banking and the Future of the Global Economy
by Mervyn King
Published 3 Mar 2016

And as declared in Magna Carta eight hundred years ago, ‘There shall be but one Measure throughout the Realm.’42 It may be that we could allow anyone to issue their own money, as advocated by the economist and Nobel Laureate Friedrich Hayek, trusting in competition to ensure that we would all decide to use the money of the ‘best’ issuer (the supplier most trusted not to abuse their ability to print money).43 But competitive monies have arisen rarely, and usually only in situations where government money is either absent (as, for example, in the use of cigarettes as currency in prisoner-of-war camps) or badly managed (as in periods of hyperinflation). Despite the abolition of foreign exchange controls, competition among national currencies has not reduced the dominance, within each economy, of a single public currency. There are exceptions, but they are few and far between. The abandonment of their own currency by Panama and Ecuador, and their adoption of the dollar (see Chapter 7), is one example.

Super Continent: The Logic of Eurasian Integration
by Kent E. Calder
Published 28 Apr 2019

China’s recent macroeconomic growth, like Japan’s high-speed expansion of the 1950s, 1960s, and early 1970s, has been leveraged by a mountain of debt, secured mainly by real estate. The structural disequilibria in the Chinese political economy have, like those of Japan before 1980, been insulated from global pressures by foreign exchange controls, preventing the outflow of capital. The uncertain consequences for the Chinese domestic political economy if exchange controls were substantially liberalized are an imponderable that must be haunting Beijing. In Japan, financial liberalization led, after an interval of powerful countervailing stimulus during the 1980s, to an economic dislocation from which that country has still not fully recovered, nearly three decades later.

East West Street: On the Origins of "Genocide" and "Crimes Against Humanity"
by Philippe Sands
Published 14 Jul 2016

Simon Dubnow’s pessimism proved well-founded: he was murdered close to his home two years after Lemkin left Riga. Weeks of waiting in Stockholm turned into months. Karl Schlyter suggested he might lecture at the university, so he took an intensive course in Swedish. By September 1940, he was proficient enough to lecture in Swedish on foreign exchange controls and to write a book on the subject, also in the newly learned language. Letters arrived from Bella and Josef, offering rare moments of happiness, tinged with anxiety about their well-being under the Soviets. Restless and driven, incapable of indolence, Lemkin sought a bigger project. A map of Europe offered an idea as “the blood red cloth with the black spider on a white field” extended its reach across the Continent.

pages: 454 words: 134,482

Money Free and Unfree
by George A. Selgin
Published 14 Jun 2017

We go further in arguing that fiscal forces have typically shaped the industrial organization of money production, throughout history and across countries, and account for its major institutional features even in advanced democracies today. Such observed legal restrictions as statutory reserve requirements, interest rate ceilings, foreign exchange controls, and monopoly issue of currency impede efficiency but raise revenue. A RATIONAL DICTATOR MODEL To develop our hypothesis, we adopt a method found in the writings of the Italian fiscal theorists, especially Amilcare Puviani. According to James Buchanan (1960: 64), Puviani tried to account for overall government tax arrangements by asking “two simple questions.”

pages: 565 words: 134,138

The World for Sale: Money, Power and the Traders Who Barter the Earth’s Resources
by Javier Blas and Jack Farchy
Published 25 Feb 2021

Instead, they expanded into merchant banking and private equity, one day lending money to the government of Nigeria, the next investing in Peruvian anchovy factories. The commodity traders were, effectively, engaging in capital arbitrage: raising funds in the industrialised world, and investing them in emerging markets, where they enjoyed fatter returns. It was a risky world, however, besieged by political crisis, encumbered by foreign exchange controls, and handicapped by red tape. But if they got the timing right, the traders could hit the jackpot. In Brazil and Argentina, for example, investments paid for themselves in as little as two or three years, compared with ten years or longer in developed nations. 38 The trading houses were confident they would get paid: without them, countries couldn’t export their goods and earn precious hard currencies.

India's Long Road
by Vijay Joshi
Published 21 Feb 2017

While this point has some merit, it is not inconsistent with the view that planning was excessively capital-​intensive and autarkic. 7. For an authoritative analysis of the control system, see Bhagwati and Desai (1970) and Bhagwati (1993). Note that price, investment, and distribution controls under Nehru did not reach the draconian severity that they were to attain under Indira Gandhi. Foreign exchange controls were a slightly different story. They were quite relaxed until the mid-​1950s but became increasingly tight after the foreign exchange crisis of 1957. By 1964, they constituted a serious impediment to production, part of the ‘quiet crisis’ that led to the World Bank sending the Bell Mission to report on the state of the Indian economy.

pages: 632 words: 159,454

War and Gold: A Five-Hundred-Year History of Empires, Adventures, and Debt
by Kwasi Kwarteng
Published 12 May 2014

., 168–70, 193, 202, 204, 207, 252, 259, 306, 308, 311, 339 Ekali swimming pools, 335–6 El Dorado, 13 Elizabeth II, Queen, 270 Ellerman, John, 87–8 ‘emerging markets’, 289 Emminger, Otmar, 187, 254–6 English, Phil, 297 Erhard, Ludwig, 182 ERM (exchange rate mechanism), 263–72, 276, 280 euro conditions for joining, 272–3, 277, 336 Greece joins, 280–1, 335–7 introduction of, 272–81, 334–5 and moral hazard, 274 risk of collapse, 346–7 European Central Bank, 272, 346 European Commission, 346 European Economic Community (EEC), 211, 226, 262, 276 European Financial Stabilization Facility (EFSF), 338 European Union, 267, 276, 337, 352 Evening Standard, 118 excess profits duty, 104–5 Export-Import Bank of Japan, 195 Export-Import Bank of Washington, 154, 164 Fairchild, Fred, 103 Faisal, King, 229–30 Federal Reserve Accord of 1951, 164–5, 169 under Bernanke, 327, 343 under Burns, 215, 233 establishment of, 108 Federal Open Market Committee (FOMC), 163–4 and Great Depression, 126–8 under Greenspan, 258–60, 301–4, 310, 313–14, 325 and market stabilization, 259–60 under Martin, 205–6, 215 Meltzer’s history of, 212–13 relationship with Treasury, 163–7, 169 Strong and New York branch, 123 under Volcker, 223, 237–8, 249–50 Feis, Herbert, 83 Ferguson, Niall, 6, 90, 318–19, 351 fiat money, 5, 61, 320 Field, Marshall, 75 ‘Financial Revolution’, 24 Financial Times, 227, 265, 271–2, 326, 347 Finland, 278 First Bank of the United States, 67 First World War, outbreak of, 90–3 fiscal policy, primacy of, 2–3 ‘fiscal repression’, 357–8 Fish, Hamilton, 157 Fisher, Irving, 121–2 Fisk, James, Jr (‘Big Jim’), 76 Fleming, Ian, 4 floating currencies, 226, 231, 234–5, 262, 299 florins, 11 Forbes, Steven, 299 Ford Motor Company, 121 Ford, Gerald, 232, 235, 308 foreign exchange controls, abolition of, 242–3 Forster, E. M., 98 Fort Knox, 4, 213, 219 France challenge to dollar primacy, 209–11 continuation of gold standard, 129–31 credit system, 99–100 Deng Xiaoping visit, 283 departure from gold standard, 132 First World War finance, 99–100 gold reserves, 85, 100, 227 Napoleonic, 48 national debt, 342, 352 overseas investments, 101 and single currency, 275–6 see also French Revolution Francis, King, 11 Franco-Prussian War, 101 Frankfurt Gazette, 101 Frankfurt Stock Exchange, 101 Franz Ferdinand, Archduke, 90–1 French Revolution, 3, 5–6, 43–50, 54, 109, 135, 192 Friedensburg, Ferdinand, 185 Friedman, Milton, 21, 126–30, 233–5, 241–2, 247, 249, 303–4 Fry, Roger, 82 Fuggers bank, 19–20 Fuld, Richard, 329 full employment, 143, 159–60, 235 Furnese, Sir Henry, 25–7 Gaddafi, Colonel Muammar, 225 Gaitskell, Hugh, 155–6 Galbraith, John Kenneth, 7, 125 Galsworthy, John, 81, 105 Geithner, Tim, 343 General Agreement on Tariffs and Trade (GATT), 200 General Motors, 117, 153–4 Genoese bankers, 19–20 George I, King, 35 Germany currency reform, 183–8, 193 dependence on American capital, 119–24, 126 elimination of unemployment, 149 First World War finance, 99–103 gold reserves, 227 and Greek debt crisis, 338, 347–8 hyperinflation, 4, 120 inflation, 101–2, 110 issue of paper money, 98, 100–1 national debt, 352, 355 Nazi Germany, 132–6, 149 overseas investments, 101 post-war, 181–8 rearmament, 134 reunification, 266, 268 and single currency, 274–8, 280, 334 tax policy, 102–3 unconditional surrender, 182 war economy, 135–6 war loans, 100–1 war reparations, 119, 123 Weimar Republic, 120–1 see also East Germany; West Germany Gettysburg Address, 66 Gilbert, Seymour Parker, 122–3 Gilmour, Ian, 243, 245–6 gilts, see government bonds Giscard d’Estaing, Valéry, 209 Gladstone, William, 7, 93, 148, 234 Gladwell, Malcolm, 74 Glass–Steagall Act, 195 Goebbels, Joseph, 132 gold break with dollar, 214, 218–20, 223, 225 Bretton Woods and dollar link, 140–4, 149–50, 167–70 as commodity, 76, 112–13 global stocks of, 358–9 revaluation of, 223, 225–7 rising price of, 226–7, 238, 320–1, 341 two-tier market in, 212, 227 value of, 53, 130–1, 140, 148, 158, 167, 209, 211–12, 219, 223, 320, 359 gold bloc, 131–2 gold payments, suspension of, 3–4 Gold Pool, 212, 227 gold standard, 2–4 abandonment of, 129–32 de Gaulle and return to, 210–11 establishment of, 52–3, 59–62, 64–5, 234 and European monetary union, 263, 273 return to, 109, 111–15, 118–19, 123, 142–3 suspension of, 92–3, 98 US adoption of, 77–8, 80 ‘Golden Rule’, de Gaulle’s, 211 Goldman Sachs, 164, 329–30 goldsmiths, 25, 357, 359 Goodman, Benny, 304 Goschen, George, 84–5 Gould, Jay, 75–6 government bonds (gilts), 55, 81–4, 90, 313 Greek, 347 and quantitative easing, 342–3 US, 71–3 government debt conversion of, 34, 84 investment in, 37–8, 73 and lessons of Greek crisis, 356 means of reduction, 357–8 government spending and collapse of Keynesian consensus, 241, 244 cuts under Thatcher and Reagan, 242, 244–6, 260–1 and democracy, 2–3, 93, 279 and financial crisis, 339–40, 352–3 monetarist critique of, 233–4 post-war cuts in, 179–80 Graham, Benjamin, 161 Great Contraction, 127 Great Depression, 4, 115, 123–30, 134, 177, 191, 193, 219, 240 Bernanke and, 343 and commodity prices, 127–30 Keynes’s view of, 128–9 monetarist explanation of, 126–9 see also Wall Street, crash of 1929 ‘Great Recession’, 228, 235 Great Society programme, 204–5, 212–13, 215, 234, 249, 323–4 Greece austerity, 343, 345, 348 debt crisis, 334–9, 345–8, 356 general election, 345–6 and single currency, 280–1, 335–7 tax evasion, 335–6 greenbacks, 71–2, 74, 76 Greenspan, Alan, 250, 258–9, 297, 343 and financial crisis, 301–4, 307–10, 312–14, 322, 326–7, 339–42, 352 Gregory, Judd, 309 Grenville, George, 39–40 Grey, Sir Edward, 107 Groener, General, 100 Guardian, 245, 351 Gulf states, 224–5, 231 Guterres, António, 277 Gutfreund, John, 339 Gutt, Camille, 150 Guy, Thomas, 36 Habsburg imperialism, 18–19 Haldeman, H.

Crisis and Leviathan: Critical Episodes in the Growth of American Government
by Robert Higgs and Arthur A. Ekirch, Jr.
Published 15 Jan 1987

Many of the institutional arrangements created during the Hundred Days merely reactivated programs and agencies employed during World War I. In his magnificent essay "The New Deal and the Analogue of War" William Leuchtenburg has documented in detail the indebtedness of the early New Deal to the wartime precedents. Such antecedents existed for the foreign exchange controls, the labor laws, the Tennessee Valley Authority, the Civilian Conservation Corps, the securities regulations, the government's housing programs, several of the credit agencies, and the transportation act as well as for the most critical and sweeping measures, the Agricultural Adjustment Act and the National Industrial Recovery Act.

pages: 868 words: 147,152

How Asia Works
by Joe Studwell
Published 1 Jul 2013

In a similar vein, the influential economist Albert Hirschman described successful economic development as a ‘multi-dimensional conspiracy’. 233. See William Megginson and Jeffry M. Netter, ‘From State to Market: A Survey of Empirical Studies on Privatisation’, Journal of Economic Literature 39 (2001), pp. 321–89. 234. The Japanese tariff increases date from 1961. In part they compensated for an easing of foreign exchange controls demanded by the IMF and the OECD, which Japan joined in 1964. Lockwood (ed.), State and Economic Enterprise in Japan, p. 491, describes the tariff increases as ‘a sweeping upward revision of tariffs … quietly begun’. The point about increased protection in the midst of the development process extends to other historical examples – Germany increased levels of protection from 1878 in a critical phase of her industrial development. 235.

pages: 444 words: 151,136

Endless Money: The Moral Hazards of Socialism
by William Baker and Addison Wiggin
Published 2 Nov 2009

Other wide-ranging works, such as Lewis’s Economic History 1919-1939, omit the country save for noting its leadership position in setting the highest tariffs in the world, both in 1913 (33%) and later in 1925 (44%), along with its joining a host of Third World nations in imposing import licenses and foreign exchange controls in the early 1930s.24 Its political situation began to be deeply troubled during the Depression years, as detailed by Stanley Payne: The tenor of the new government was revealed within less than a month, on May 11, 1931, when mobs led by anarchists (and some Radical Socialists) sacked monarchist headquarters in Madrid and then proceeded to set fire or otherwise wreck more than a dozen churches in the capital … Anarchists denounced the Republic as being worse than the monarchy.

pages: 524 words: 143,993

The Shifts and the Shocks: What We've Learned--And Have Still to Learn--From the Financial Crisis
by Martin Wolf
Published 24 Nov 2015

Back in the 1970s, the high-income economies mostly still had extensive regulations on product markets and even employed direct controls on wages and prices, either permanently or temporarily. Marginal tax rates on high incomes were above 70 per cent in both the US and the UK.53 While the high-income countries had substantially liberalized trade in goods in the 1950s, 1960s and 1970s, trade in services was still highly restricted and most countries retained foreign-exchange controls. In developing economies, controls over markets were far more extensive. Many economies also had high levels of public ownership of industry. In India, the economy was constrained by what had come to be known as the ‘licence raj’. In the socialist economies of China, the Soviet Union and the Soviet empire in Central and Eastern Europe, comprehensive economic planning and public ownership remained in effect.

pages: 597 words: 172,130

The Alchemists: Three Central Bankers and a World on Fire
by Neil Irwin
Published 4 Apr 2013

Had the Germans and French been able to work out a deal, it might well have prevented all-out economic collapse and steered Germany away from nationalism and militarism. Instead, the Reichsbank hiked interest rates to try to maintain the gold standard. A two-day “bank holiday” was declared and foreign exchange controls put in place to reduce outflows. Unemployment soared to 34 percent. So did hostility to the French and to most other non-Germans. The Nazis went from fringe party to ruling power. Even clever, urbane Hjalmar Schacht became an ally of Hitler, serving as a top economic official throughout the 1930s.

pages: 1,202 words: 424,886

Stigum's Money Market, 4E
by Marcia Stigum and Anthony Crescenzi
Published 9 Feb 2007

Deregulation and Globalization of Debt Markets A major development in the United States and worldwide has been the breakdown of barriers of all kinds both around and within national capital markets; these include the lifting of restrictions on the issuance of securities, on who could borrow and on who could lend; on foreign exchange controls; and on the elimination of withholding taxes on interest paid to foreigners. In addition, the international payments system has advanced to the point where sending both securities and monies across borders has been simplified and standardized enough to entice investors to freely consider foreign investments as an alternative.

…

In its initial stages, the growth of the Eurodollar market was hampered by myriad exchange control regulations that all nations except the United States imposed on their residents with respect to (1) the use of domestic currency to acquire foreign exchange and (2) the disposition of foreign-exchange earnings. This changed in 1958 when the major European countries, with the exception of the United Kingdom, substantially liberalized their foreign-exchange controls as a first step toward making their currencies fully convertible. A fourth factor that stimulated the growth of the Eurodollar market was the operation of Regulation Q during the tight money years of 1968 and 1969. At that time, U.S. money rates rose above the rates that banks were permitted to pay under Reg Q on domestic, large-denomination CDs.

pages: 741 words: 179,454

Extreme Money: Masters of the Universe and the Cult of Risk
by Satyajit Das
Published 14 Oct 2011

The man and his family survived the earthquake and subsequent fire, managing to get out of the destroyed city by boat. His father paid the boatman, who would not accept money, in gold, secreted away for emergencies. Gold, the sweat of the god as the Incas called it, is hard money. It is the only money when chaos ensues. In the 1970s many Indians emigrated in search of a better life. Indian foreign exchange controls prevented legal conversion of worthless Indian rupees into real money—American dollars or British pound sterling. Emigrants resorted to Hawala or Hundi—an informal money transfer system. You needed an introduction to a money broker. You paid him your rupees. In return you received a small chit of paper on which were scrawled a few words in Urdu, a language spoken mainly in Pakistan and India.

pages: 782 words: 187,875

Big Debt Crises
by Ray Dalio
Published 9 Sep 2018

In other words, currency declines allow countries to offer price cuts to the rest of the world (helping to bring in more business) without producing domestic deflation. So after supporting the currency in unsustainable ways (i.e., expending reserves, tightening monetary policy, making very strong assurances that there will not be a devaluation of the currency, and sometimes imposing foreign exchange controls), policy makers typically stop fighting and let the currency decline (though they generally try to smooth its fall). Here is what we typically see after policy makers let the currency go: The currency has a big initial depreciation, on average declining around 30 percent in real terms The decline in the currency is not offset by tighter short rates, so that the losses from holding the currency are significant (on average, around 30 percent in the first year) Because the decline is very severe, policy makers try to smooth it, leading them to continue to spend down reserves (on average, by another 10 percent for a year into the bust) Central banks should not defend their currencies to the point of letting their reserves get too low or their interest rates too high relative to what is good for the economy because the dangers those conditions pose are greater than the dangers of devaluation.

pages: 823 words: 206,070

The Making of Global Capitalism
by Leo Panitch and Sam Gindin
Published 8 Oct 2012

The implication of this concentration of voting power was evident in the proposal that no member country would be allowed “to default on its external obligations . . . without consent of the Fund,” nor adopt any “monetary or banking or price measure or policy . . . which, in the opinion of a majority of the member votes, would bring about sooner or later a serious disequilibrium in the balance of payments.”38 On such vital issues, the US would in practice be able to decide. As to what matching restrictions would be imposed on financial capital, it was of course significant that White’s plan, while insisting that the overall goal was “to reduce the necessity and use of foreign exchange controls,” permitted states to maintain them.39 And although it was never on the cards that the US itself would impose them, White’s early drafts had contemplated, as a “far-reaching and important requirement,” that the US would be prepared to cooperate in policing the capital controls of other countries.

pages: 736 words: 233,366

Roller-Coaster: Europe, 1950-2017
by Ian Kershaw
Published 29 Aug 2018

Poverty levels in backward rural areas were profound, average incomes far lower, for example, than in Turkey. Belarus and Moldova, both of which, like Ukraine, were highly dependent on Russia, also suffered a prolonged deep economic depression during the 1990s. The response in Belarus after 1994, to restore price and foreign-exchange controls and restrict private enterprise, could not halt the economic decline. Moldova’s abrupt turn from a planned to a liberalized economy in 1992, with an infrastructure unprepared for such a drastic shift, produced huge inflation and unemployment, leaving much of the population in poverty and the country languishing among Europe’s poorest.

America in the World: A History of U.S. Diplomacy and Foreign Policy
by Robert B. Zoellick
Published 3 Aug 2020

But the president had too many other priorities with Britain in 1947, and the United States agreed to launch GATT even with Britain’s imperial preferences.113 This first multilateral trading round, with twenty-three participants, proved that cooperation on trade liberalization was possible. The parties cut tariffs on forty-five thousand items, covering about half of world trade. The process stimulated world trade even as economies were struggling to recover and remove foreign exchange controls. Some in Congress complained about a trade “giveaway,” but the new trade diplomacy helped unleash unparalleled economic growth in the United States and the world for decades. The engine of the American economy that eventually overwhelmed the USSR relied on a trading system imagined by Hull and Clayton.114 For Clayton, the launch of the GATT dovetailed with his mission to prod the Europeans to develop their Marshall Plan proposal.

pages: 1,123 words: 328,357

Post Wall: Rebuilding the World After 1989
by Kristina Spohr
Published 23 Sep 2019

Here, again, he showed his ability to forge compromises between proponents of different economic approaches, in particular building bridges between France and Germany.[92] And so at Madrid in June 1989 it was agreed by the leaders of the EC 12 to launch the following year the first stage of EMU – completion of the single market by 1992. This would involve abolition of all foreign-exchange controls, a free market in financial services and strengthening of competition policy – which entailed a radical reduction in state subsidies. The other prong of this policy was the reinforcement of social cohesion, which involved freedom of movement between states and guaranteed workers’ rights.

pages: 1,544 words: 391,691

Corporate Finance: Theory and Practice
by Pierre Vernimmen , Pascal Quiry , Maurizio Dallocchio , Yann le Fur and Antonio Salvi
Published 16 Oct 2017

Since the early 2000s, the share of cash and cash equivalents on companies’ balance sheets has continued to grow: Source: Factset Part of this cash is not the result of a choice but of a constraint and it is not really available. Some funds are blocked in countries that have strict foreign exchange control rules, other funds involve the payment of additional taxes (withholding taxes) before they can be transferred to the parent company, and other funds are serving as deposits, guarantees, advance payments, etc., which in some countries have to be blocked in special accounts. And even if funds are not blocked, advance payments by customers will be used to make the products or services orders and to pay suppliers.