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050d350
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Although it performed the same functions as the Dutch Wisselbank, the Riksbank was also designed to be a Lanebank, meaning that it engaged in lending as well as facilitating commercial payments. By lending amounts in excess of its metallic reserve, it may be said to have pioneered the practice of what would later be known as fractional reserve banking, exploiting the fact that money left on deposit could profitably be lent out to borrowers.
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Niall Ferguson |
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65e9a90
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M0 (also known as the monetary base or high-powered money), which is equal to the total liabilities of the central bank, that is, cash plus the reserves of private sector banks on deposit at the central bank; and M1 (also known as narrow money), which is equal to cash in circulation plus demand or 'sight' deposits.
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Niall Ferguson |
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722c93a
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When making their loans, the bankers should have thought more carefully about how easily they could call back the money - essentially a question about the liquidity of the loan.
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Niall Ferguson |
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e0e4f49
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Credit was, quite simply, the total of banks' assets (loans).
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Niall Ferguson |
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75fc6c2
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relationships between debtors and creditors brokered or 'intermediated' by increasingly numerous institutions called banks. The core function of these institutions was now information gathering and risk management.
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Niall Ferguson |
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fc51cbc
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By discouraging saving and encouraging consumption, accelerating inflation had stimulated output and employment
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Niall Ferguson |
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3093998
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as inflation has fallen, so bonds have rallied in what has been one of the great bond bull markets of modern history. Even more remarkably, despite the spectacular Argentine default - not to mention Russia's in 1998 - the spreads on emerging market bonds have trended steadily downwards, reaching lows in early 2007 that had not been seen since before the First World War, implying an almost unshakeable confidence in the economic future.
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Niall Ferguson |
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4dd28b1
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annus mirabilis
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Niall Ferguson |
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cb81b95
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the price people are prepared to pay for a piece of a company tells you how much money they think that company will make in the future. In effect, stock markets hold hourly referendums on the companies whose shares are traded there: on the quality of their management, on the appeal of their products, on the prospects of their principal markets.
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Niall Ferguson |
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bb94022
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Inflation has come down partly because many of the items we buy, from clothes to computers, have got cheaper as a result of technological innovation and the relocation of production to low-wage economies in Asia.
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Niall Ferguson |
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09d0667
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Banknotes (which originated in seventh-century China) are pieces of paper which have next to no intrinsic worth. They are simply promises to pay (hence their original Western designation as 'promissory notes'),
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Niall Ferguson |
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53c8923
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mulcted
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Niall Ferguson |
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65a60fa
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Debts were transferable, hence 'pay the bearer' rather than a named creditor.
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Niall Ferguson |
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a17325f
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But the foundation on which all of this rested was the underlying credibility of a borrower's promise to repay. (It is no coincidence that in English the root of 'credit' is credo, the Latin for 'I believe
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Niall Ferguson |
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b51b7bd
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In real terms, stocks increased by a factor of 10.3; bonds by a factor of 3.4; bills by a factor of 1.8. Had my parents made the mistake of simply buying $10,000 in dollar bills in 1964, the real value of their son's nest egg would have declined in real terms by 85 per cent.
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Niall Ferguson |
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6615421
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in the history of the bond market.68 So successful did Argentina's default prove (economic growth has since surged while bond spreads are back in the 300-500 basis point range) that many economists were left to ponder why any sovereign debtor ever honours its commitments to foreign bondholders.69
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Niall Ferguson |
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f72b452
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The masses long ago switched from stocks to investments having higher yields and more protection from inflation. Now the pension funds - the market's last hope - have won permission to quit stocks and bonds for real estate, futures, gold, and even diamonds. The death of equities looks like an almost permanent condition.5
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Niall Ferguson |
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15a64c3
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the joint-stock, limited-liability corporation: joint-stock because the company's capital was jointly owned by multiple investors; limited-liability because the separate existence of the company as a legal 'person' protected the investors from losing all their wealth if the venture failed.
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Niall Ferguson |
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88132aa
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and growing need for fixed income securities, and for low inflation to ensure that the interest they pay retains its purchasing power. As more and more people leave the workforce, recurrent public sector deficits ensure that the bond market will never be short of new bonds to sell.
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Niall Ferguson |
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615ca82
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Bonds, as we saw in Chapter 2, are no more than promises by governments to pay interest and ultimately repay principal over a specified period of time. Either through default or through currency depreciation, many governments have failed to honour those promises.
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Niall Ferguson |
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a10fad5
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some of the structural drivers of inflation have also weakened. Trade unions have become less powerful. Loss-making state industries have been privatized. But, perhaps most importantly of all, the social constituency with an interest in positive real returns on bonds has grown. In the developed world a rising share of wealth is held in the form of private pension funds and other savings institutions that are required, or at least expected, ..
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Niall Ferguson |
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4e0452e
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without easy credit creation a true bubble cannot occur. That is why so many bubbles have their origins in the sins of omission or commission of central banks.
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Niall Ferguson |
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2c45ef4
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Unlike Britain, France, Italy and Russia, however, Germany did not have access to the international bond market during the war (having initially spurned the New York market and then been shut out of it).
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Niall Ferguson |
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d03e1cc
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Between 1929 and 1933, the public succeeded in increasing its cash holdings by 31 per cent; commercial bank reserves were scarcely altered (indeed, surviving banks built up excess reserves); but commercial bank deposits decreased by 37 per cent and loans by 47 per cent. The absolute numbers reveal the lethal dynamic of the 'great contraction'. An increase of cash in public hands of $1.2 billion was achieved at the cost of a decline in bank ..
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Niall Ferguson |
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ac0a502
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figures must be adjusted downwards to take account of the cost of living, which has risen by a factor of nearly seven in my lifetime.
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Niall Ferguson |
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c5d87cd
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desideratum,
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Niall Ferguson |
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b08710d
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fettle
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Niall Ferguson |
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5a4e4cd
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welter
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Niall Ferguson |
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cbcd6fe
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The principle of limited liability was implied: shareholders stood to lose only their investment in the company and no other assets in the event that it failed.15
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Niall Ferguson |
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5fd0657
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it was decreed that Banque Generale notes should be used in payment for all taxes, a measure initially resisted in some places but effectively enforced by the government. Law's ambition was to revive economic confidence in France by establishing a public bank, on the Dutch model, but with the difference that this bank would issue paper money. As money was invested in the bank, the government's huge debt would be consolidated. At the same ti..
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Niall Ferguson |
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f3ea74d
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sop
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Niall Ferguson |
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47e25bd
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Rising to his feet he said, 'If the heir to the throne has been assassinated, well, first of all we know nothing for certain, and secondly, it doesn't concern us in the least.'...
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Niall Ferguson |
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a6732f1
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no man prepar'd for it; no man consider'd it would come like a Thief in the night, exactly as it happens in the case of death.'74
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Niall Ferguson |
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bb4fbe0
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was true of the English East India Company, the VOC's biggest challenge was the principal-agent problem: the tendency of its men on the spot to trade on their own account, bungle transactions or simply defraud the company.
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Niall Ferguson |
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191599f
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President Franklin Roosevelt argued that all that Americans had to fear was 'fear itself'.
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Niall Ferguson |
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a142c9a
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Another Russian unit ordered the Jews of a shtetl near Wolkowisk to strip naked, dance with one another, and then ride on pigs; they then proceeded to shoot every tenth person.
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Niall Ferguson |
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98d4b51
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they were a sort of vermin like plague-rats that had to be exterminated.
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Niall Ferguson |
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a67d25e
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The people were divided into the persecuted and those who persecuted them. That wild beast, which lives in man and does not dare to show itself until the barriers of law and custom have been removed, was now set free. The signal was given, the barriers were down.
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Niall Ferguson |
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8108f00
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modern terms, what Law was attempting could be described as reflation. The French economy had been in recession in 1716 and Law's expansion of the money supply with banknotes clearly did provide a much-needed stimulus.52
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Niall Ferguson |
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26240ae
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and ingenuous outsiders, like Groucho Marx.83
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Niall Ferguson |
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584f41d
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a chaos so great and so obscure that nothing about it can be known'.
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Niall Ferguson |
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5453953
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the air was filled with obscure ideas
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Niall Ferguson |
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a0b6f82
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By the summer of 1920 Lenin felt confident enough to export the Revolution westwards, ordering the Red Army to march on Warsaw and confidently talking of the need to 'sovietize Hungary and perhaps Czechia and Romania too'. Only their decisive defeat by the Polish army on the banks of the River Vistula halted the spread of the Bolshevik epidemic.
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Niall Ferguson |
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dde438e
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codicils,
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Niall Ferguson |