Economic Disasters of the Twentieth Century
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Economic Disasters of the Twentieth Century

Edited by Michael J. Oliver and Derek H. Aldcroft

The First and Second World Wars, the great depression, oil shocks, inflation, financial crises, stock market crashes, the collapse of the Soviet command economy and Third World disasters are discussed in this comprehensive book. The contributors subject these disasters to in-depth assessment, carefully considering their costs and impact on specific countries and regions, as well as assessing them in a global context. The book examines the legacy of economic disasters and asks whether economic disasters are avoidable or whether policymakers can learn from their mistakes.
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Chapter 6: Financial Crises

Michael J. Oliver


1 Michael J. Oliver For those who have studied the history of money over the very long run it is unsurprising that there have been recurrent financial crises during the twentieth century. As Chancellor (1999) has recently reminded us in his book on financial speculation, financial crises have stretched back at least as far as Ancient Rome during the second century BC. In the fourth edition of his classic book, Manias, panics and crashes, Charles Kindleberger (2000) has shown that since 1618, there have been around 50 world-class manias and panics. The distinguishing feature of the financial crises of the twentieth century, however, is that they continued to occur despite vigorous attempts to strengthen the international financial architecture and when our understanding about nominal variables, financial markets and banking structures has made enormous strides. For the less specialized reader, this might come as a surprise as it is well known that the Bretton Woods institutions that were set up in the wake of the crisis-ridden interwar years were designed to bolster the international monetary system and prevent a repetition of such crises. However, even in the heyday of Bretton Woods, when the supranational institutions were at the zenith of their power and international capital markets were relatively subdued, the frequency of currency crises was greater than in the interwar years although there was an absence of banking crises. Over the last 25 years, there has been an increased tendency for banking crises to spill over into the currency markets, creating...

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