Читать книгу Financial Cold War. A View of Sino-US Relations from the Financial Markets онлайн

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During the four years of WW1, European governments had incurred total war spending of around $200 billion, or roughly half of their aggregate GDP. In addition to borrowing from their own citizens and from overseas, they had raised taxes and printed more money. By the end of the war, the money supply in Britain had doubled, in France it had tripled, and in Germany it had quadrupled.ssss1 In the early 1920s, in the face of social and fiscal pressures, Germany resorted to uncontrolled money printing, leading to massive hyperinflation that decimated the value of middle-class savings. Britain, still vested with the pride of a great imperial power, chose the opposite route and sought to restore the value of sterling to the pre-war level.

Before WW1, the British pound's exchange rate to the US dollar, fixed by the gold standard, had been $4.86. Having untethered itself from gold during the war, sterling's exchange rate had fallen to as low as $3.20. In 1920–1921, the Bank of England, led by its conservative governor Montagu Norman, chose to deflate the economy via high interest rates in order to reverse wartime inflation. Prices fell by 50 percent from their wartime highs and the pound recovered to $4.35 by the autumn of 1924. However, while the country rebounded from a recession in 1921, growth remained muted and the exchange rate struggled to recover to the 1914 level.ssss1