Inflation can destroy the value of long term fixed-rate bonds, especially when that inflation is volatile or rising. If inflation gets out of control, it can become difficult to find willing lenders in a currency people have little faith in. For much of the mid-20th century, France was plagued by inflation that was high by…
A 1920s bubble where prices rise quickly, encouraging hordes of new speculators into the market, overwhelms the only prudential safeguard available at this time, good sense. When the bust comes, the speculators left with devalued assets are ruined and even take down banks along with them. This could describe the nationwide stock market boom and…
In the 17th and 18th centuries, Europe instituted mercantilist economic policies designed to promote the accumulation of money by running trade surpluses with other countries. Since several European states pursued this policy, they couldn’t all run trade surpluses with each other, so it tended to be with their colonies that European countries sought to accumulate…
Starting at the end of the 17th century, there was a wave of financial innovation in England. It isn’t often discussed what happened farther north, in Scotland. Scotland too saw a financial revolution, though it was hampered by the relatively small size of Scotland and some crises along the way. Some of these affected England…
