Charles Read, "Calming the Storms: The Carry Trade, the Banking School and British Financial Crises Since 1825" (Palgrave MacMillan, 2023)
New Books in Economics
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The Carry Trade and Financial Crisis
The carry trade is the banking school of British financial crises since 1825. They thought they were caused by what we would now today call the carry trades. So, their theory was circular. You have low interest rates in one country or area and you have high interest rates in another. And when the interest rates in those two areas or sectors or countries converge, there's no point in borrowing or moving capital from one country to another. Now that stop of capital flows, that sudden stop creates a credit crunch in one or both of those countries. People are unable to finance their borrowings and that creates a bank,. Eventually will create a banking panic or the banks will start to collapse because they can
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