Because China’s yuan is indirectly dollar-denominated, it, like an Argentina, is vulnerable. Federal Reserve rate hikes, like the modest ones in 2013, triggered Chinese currency flight. (One can only wonder with the current Fed hikes are going to do to China.)

The second horseman is bloated asset prices. Again, think especially of the societally corrosive effects of unaffordable housing or, more generally, of the increasing concentration of financial assets in the upper percentiles of wealth, whose relatively low marginal propensity to consume further depresses economic growth. After all, if you direct income to poor people, they will only blow it on food and shelter. JD: That’s an interesting way to put it. Do you worry these outright capital controls will become more common in the West?be argued that, notwithstanding the failure of the Mississippi System, Law’s banking successors have been Ben Edward Chancellor has produced not just a brilliant explainer of the value of money and time but a hugely engaging history of the greatest problem confronting markets today. The Price of Time is a must read - a copy should be on the desk of everyone who has anything to do with financial markets or wondered why things work as they do. -- Merryn Somerset Webb * Editor-in-Chief, MoneyWeek * One is that they weren’t on a 50-year or whatever cycle. Instead, a new king implemented them to cut social unrest, etc. Like new Caesars paying off the Pretorians. Second, there were two types of debt — barley-based, which were generally “consumer” loans in today’s terms, and silver-based, which were “commercial” loans. Only the barley loans were forgiven. Third, a new king wasn’t guaranteed to do this. In existence pretty much since recorded human history, it has been one of the most hotly debated topics. It has piqued the ‘interest’ not only of businesses, financiers and governments, but also of religious institutions who have reviled the concept and mandated the wrath of God to discourage the practice. Yet, Interest has survived kings, wars, religions, economic models, and so on.

The work is also timely, as an independent panel is halfway through a review of the RBA and its operations, due for completion in March. While generally critical of most institutions, Chancellor is generally appreciative of the Bank of International Settlements (BIS). The BIS has been constantly warning against the long-term consequences of the unbridled easy-money policy of the US Fed. Infact, the BIS has gone so far as to say that beyond a point, growth of a country’s financial system is a drag on productivity growth - as the financial system ceases to be an enabler but an end in itself. Interesting, as it is one of the least understood institutions in general financial markets. Besides being a first-rate economic historian, Chancellor is also a master wordsmith; almost unique among serious finance books, The Price of Time serves well as bedtime reading. ... More than 20 years ago, Edward Chancellor's Devil Take the Hindmost supplied readers with one of the most engaging and incisive descriptions of financial manias ever written. That was a hard act to follow, but The Price of Time nicely fills the bill; it is a serious work of political economy that is part comprehensive guide to the world financial system's greatest peril and part literary chocolate torte. -- William J. Bernstein * Enterprising Investor, Chartered Financial Analysts Institute * That was not the end of the critique. Proudhon complained that interest compounds debt over time, so that a loan over time would grow to become larger than an orb of gold the size of the Earth. ³ Charging for loans slows the circulation of money, he suggested, causing ‘the stagnation of business, with unemployment in industry, distress in agriculture, and the increasing imminence of universal bankruptcy’.⁴ Interest fuels class antagonism and restricts consumption by raising the price of products. In a capitalist society, said Proudhon, workers can’t afford to acquire the objects they produce with their own hands. ‘Interest is like a double-edged sword,’ concluded Proudhon, ‘it kills, whichever side it hits you with.’⁵ A few months after Lehman’s bankruptcy, Borio was warning about the dangers of keeping extreme monetary policies in place for too long. Over the following years, he stood apart from other monetary economists in alerting the world to the unintended consequences of the zero interest rate policy (ZIRP), the negative interest rate policy (NIRP) and other monetary innovations. ‘The highly abnormal is becoming uncomfortably normal,’ Borio bemoaned after the October 2014 bond market ‘flash crash’. As one year followed another, unconventional monetary policies became more unconventional. Abnormality became the new normal.Historian Jerry Muller adds a corollary to Campbell’s Law, namely: ‘anything that can be measured and If you do nothing, you will be auto-enrolled in our premium digital monthly subscription plan and retain complete access for 65 € per month. China’s largest real estate developer, Evergrande, by itself h One of this book’s joys is its relevance to both political policy and personal finance, and were I to fault Chancellor’s marvelous volume for anything, it would be for not exploring these areas further. He devotes only a few paragraphs, for example, to the obvious relationship between the financialization-derived increase in inequality and the worldwide rise of authoritarian populism. In the words of one observer, “The pitchforks are coming.”