Book contents
- Frontmatter
- Contents
- Introduction
- Dedication
- 1 Why the World Economy Needs a Financial Crash
- Part I The Economics of Financial Inflation
- 2 Money in Globalised Times
- 3 Neo-Liberalism and International Finance
- 4 Financial Innovation: Better Machines for Financial Inflation?
- 5 The Inflation of Goodwill
- 6 Leverage and Balance Sheet Inflation
- 7 Inflation in Financial Markets
- 8 Asset Inflation and Deflation
- Part II The Culture of Financial Inflation
- Part III Financial Crisis
- Epilogue
- Notes
- Index
3 - Neo-Liberalism and International Finance
from Part I - The Economics of Financial Inflation
Published online by Cambridge University Press: 05 March 2012
- Frontmatter
- Contents
- Introduction
- Dedication
- 1 Why the World Economy Needs a Financial Crash
- Part I The Economics of Financial Inflation
- 2 Money in Globalised Times
- 3 Neo-Liberalism and International Finance
- 4 Financial Innovation: Better Machines for Financial Inflation?
- 5 The Inflation of Goodwill
- 6 Leverage and Balance Sheet Inflation
- 7 Inflation in Financial Markets
- 8 Asset Inflation and Deflation
- Part II The Culture of Financial Inflation
- Part III Financial Crisis
- Epilogue
- Notes
- Index
Summary
Cross-border credit and money capital transfers, and international money in the sense of cross-border payments, have always played a key role in the worldview of economic liberalism. Frequently international money and financial activity have been regarded as proving that, without any government or social direction, trade can reach all corners of the globe and foster capitalist business enterprise everywhere. Behind this view is a nostalgia for the era of the gold standard, approximately between 1870 and 1914, when world currencies were convertible into gold at a fixed rate. The breakdown of that system during the First World War was associated with suspensions of international payments and capital flows. Its return in 1925 was welcomed by Oliver Sprague, adviser to the US Government and the Bank of England, in the following terms:
This return to the haven of familiar monetary practice is significant of the widespread conviction that the gold standard is an essential factor in the maintenance of a reasonable measure of international stability, for which there is no practicable substitute.
Financial instability had come to be associated with the absence of a gold standard for money and exchange rates. Suchinstability gave rise to and continues to foster the delusion that the international financial system can provide an automatic mechanism to deal with economic problems.
- Type
- Chapter
- Information
- Why the World Economy Needs a Financial Crash and Other Critical Essays on Finance and Financial Economics , pp. 17 - 26Publisher: Anthem PressPrint publication year: 2010