Capital flows and currency wars

MACROECONOMIC FOCUS

Deutsche Bank's Paul Wharton on the role of central banks and governments in today's financial climate and how history will be the judge of their actions

“If you wish to destroy a nation you must first corrupt its currency. Thus must sound money be the first bastion of a society’s defence.” So Adam Fergusson concluded in his study of the hyperinflation of Austria, Hungary and the Weimar Republic of the early 1920s. The great deflation of the 1930s across the Atlantic forced the abandonment of the gold standard, giving rise to the array of fiat currencies we know today. Financial deregulation, combined with the Eurasian savings glut, culminated in a staggering accumulation of financial obligations and liabilities across borders, leading...