My investment portfolio
I wrote here last week that the economists of the West need to start being a little less self-centred. Their prevailing view still seems to be that this is the “worst financial crisis ever”, when in fact it is nothing of the sort. It isn’t very nice, but it’s just a repetition of the usual cycle of financial history.
A reminder of this came from a reader who sent me a link to an article from The New York Times about a medieval credit crunch. The bankers of our own King Edward I relied on early forms of wholesale financial markets to keep the king in cash.
That worked fine most of the time. But when an expensive war came along at the same time as a new Papal duty appeared to finance the crusades, liquidity vanished – leaving poor Edward “at the mercy of loan-shark-like creditors at precisely the time he most needed cash”.
Those who still aren’t convinced on all this – who think that we’re living in a period of unique upheaval – should read what my old friend Peter Frankopan writes about numismatic history and the manner in which the Byzantine emperor Alexios Komnenos saved his own single currency from a crisis brought on by an overly indebted state and a nasty bout of the equivalent of quantitative easing.
• Read the full editor’s letter here: My investment portfolio.