The Twentieth and Twenty-First Centuries: From the Banking School to the Carry Trade

Charles Read ()
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Charles Read: University of Cambridge

Chapter Chapter 9 in Calming the Storms, 2023, pp 275-312 from Palgrave Macmillan

Abstract: Abstract In the twentieth and twenty-first centuries, the investment flows of capital that the Banking School blamed for financial crises in Victorian times became the Carry Trade, a means of profiting from the disparity between different interest rates. This chapter describes how the Carry Trade failed to flourish in the twentieth century until the late 1960s and resulted in a period in British history that was relatively free from major financial crises. However, policy change from the 1970s onwards encouraged the return of the Carry Trade and similar mistakes were made with monetary policy as in the period between 1825 and 1866, resulting in the return of severe crises in 1973–1975 and 2007–2009. The options for inhibiting further serious crises through the use of monetary policy are discussed.

Keywords: Banking School; Bank of England; Monetary policy; Banking stability; Secondary banking crisis; Global financial crisis (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palscp:978-3-031-11914-9_9

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DOI: 10.1007/978-3-031-11914-9_9

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