“Eichengreen’s purpose is to provide a brief history of the international monetary system. In this, he succeeds magnificently. Globalizing Capital will become a. Globalizing Capital: A History of the. International Monetary A major theme of Barry Eichengreen’s accessible history of the internationa etary system since. Eichengreen, B.: Globalizing Capital: a. System. IX, pp. Princeton Univer. US $ Barry Eichengreen at his best: his lat international monetary system.
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A bit turgid, this academic history of international banking and the gold standard gave me a lot of perspective on banking and how it came to be the way it is now. The gold standard was finally doomed after the First World War. Capital is indeed globalized, as necessitated by the need to support foreign exchange in a sane way. Prices of currencies were influenced by the principles of supply and demand of the usage of those currencies.
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His recent publications include Less Than Zero: However, the book suggests that this was a mistake; speculation is more limited by fundamental shifts than imagined and when those fundamentals are bad, the crises will occur regardless of the standard.
The story of the book is one of governments constantly feeling pressure to devalue their currency, thus increasing export competitiveness and potentially wage growth. Smaller economies, on the other hand, were tossed to the wind.
Barry Eichengreen, Globalizing Capital
Eichengreen makes frequent allusion to the fact that countries could easily devalue their currency without setting off the spiral of exchange rate drops if they just did it together, but apparently that has essentially never happened. I totally recommend it for Economy students in the undergraduation.
It begins in the early s in Europe, and remains focused there and on the Un I initially shelved this to read on the hoped-for assumption that it was a more ambitious book than it is. This, however, forced them to follow the monetary policies of the other country, with sometimes disastrous results see: MB rated it did not like it Aug 02, By the mid-1 Eichengreen here traces a history of money from the mids to today.
Globalizing Capital: A History of the International Monetary System
This would deprive countries of gold and further threaten their exchange rates. That being said, Eichengreen did eichenyreen masterful job. Investors who own debt sufficient to see the value of that debt diminished by inflation and augmented by deflation. I’ll certainly admit that if I had taken the time to review the macroeconomic concepts involved here, which I have learned at least twice before, I probably would’ve gotten more out of the book. What could a country do to prevent this? Goodreads helps you keep track of books you want to read.
In any case, Eichengreen’s analysis is far more detailed than my sketch, and he lays his arguments out very convincingly.
This resulted in the monetary system we have today. Starting from the early days of the markets’ globalization in the late 19th century, he traces the transformation and the trial an error of the different international monetary systems. Eichengreen also tends, in my view, to overstate the extent to which democratic nations must rely upon g,obalizing central bank policies, unhindered by fixed exchange rates, to avoid financial and macroeconomic turmoil.
Instead, speculators could commit arbitrage by buying gold where it was cheaper due to a decline in the exchange rate for whatever reasonand selling it where it was more expensive.
But that openness is itself to some extent at least a matter of policy.
Jun 07, Ben Newton rated it really liked it. Is it even possible for a coordinated strategy to provide those fixes? It is largely compelling, thought-provoking, highly informative, and a pleasure to read. The implication seems undeniable: Account Options Sign in.
Here central banks played an active role, mainly by trying to run the gold standard on the cheap, supplementing gold reserves with holdings of foreign exchange instead of further devaluing their currencies or enduring more deflation so as to achieve a higher, sustainable relative price of gold. After the war, nobody was willing to agree with the system not even the British and Frenchand the United States was hiding in isolationism.
Apr 08, Erin rated it liked it. Lists with This Book. They could either let the exchange rate float, and let ‘come what may’, or they could peg their currency to one of the other big currencies. Professor Eichengreen is the convener of the Bellagio Group of academics and economic officials and chair of the Academic Advisory Committee of the Peterson Institute of International Economics.
Eichengreen’s work demonstrates that insights into the international monetary system and effective principles for governing it can result only if it is seen a historical phenomenon extending from the gold standard period to interwar instability, then to Bretton Woods, and finally to the post period of fluctuating currencies.
Usually, the problem is that I want mechanistic hypotheses that the available data can’t evaluate. Eichengreen’s work demonstrates that insights into the international monetary system and effective principles for governing it can result only if it is seen a historical phenomenon extending from the gold standard period to interwar instability, then to Bretton Woods, and finally to the post period of fluctuating currencies.
Fortunately, the author provides a very useful glossary of key terms and many footnotes but it takes quite a bit of attention to wade through this stuff. Overall, it seems like there is no ultimately effective way to avoid large fluctuations in currency value.
Today pegging exchange rates would require very radical reforms of a sort that governments are understandably reluctant to embrace. Want to Read Currently Reading Read. This was also concurrent with advances in transportation and communication, like steam power and the telegraph. Preview — Globalizing Capital by Barry Eichengreen.