New World Economics

By: Nathan Lewis
all contents copyright Nathan Lewis 2005-2013

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Contact: nathan@newworldeconomics.com
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"Easily the most important book of 2013 ... and the best book on money that's yet been written"
-- John Tamny (RealClearMarkets.com)


Want a basic introduction? Watch a thirty-minute presentation given at the Cato Institute in February 2014,
or this
two-minute video on how to introduce and use a parallel currency.

Read my previous book, Gold: the Once and Future Money (2007), available in five languages worldwide.

I'm on Twitter @NathanNWE
Click Here for the Traditional City/Heroic Materialism Archive
 


Item at Forbes.com
October 16, 2014: Russia's Currency Crisis: This Is So 2008!


A Brief History of World Currencies, 1949-2014


October 19, 2014


Here's something you don't see everyday: a look at all the currencies in the world, from 1949 to 2014.

We looked at currencies during the 1914-1941 period earlier this year:

July 18, 2014: Foreign Exchange Rates 1913-1941 #8: A Brief Summary
June 22, 2014: Foreign Exchange Rates 1913-1941 #7: Switzerland's Independence; Turkey Avoids Devaluation
June 1, 2014: Foreign Exchange Rates 1913-1941 #6: Hyperinflation in Poland; Russia's WWI Decline
May 25, 2014: Foreign Exchange Rates 1913-1941 #5: Devaluations By Japan and France
April 27, 2014: Foreign Exchange Rates 1913-1941 #4: Britain Leads the World Into Currency Chaos
April 20, 2014: Foreign Exchange Rates 1913-1941 #3: The Brief Rebuilding of the World Gold Standard System
April 6, 2014: Foreign Exchange Rates 1913-1941 #2: The Currency Upheavals of the Interwar Period
March 30, 2014: Foreign Exchange Rates 1913-1941: Just Looking At the Data

We also looked at major central banks in detail:

August 3, 2014: The Reichsbank, 1924-1941
July 27, 2014: The Bank of France, 1914-1941
July 20, 2014: The Bank of England, 1914-1941

This followed a look at the Fed in the pre-WWI era:

December 23, 2012: The Federal Reserve in the 1920s 4: The Historical Record
December 16, 2012: The Federal Reserve in the 1920s 3: Balance Sheet and Base Money
November 25, 2012: The Federal Reserve in the 1920s 2: Interest Rates
November 18, 2012: The Federal Reserve in the 1920s

Click here for today's contribution:

All the currencies in the world, 1949-2014


The source of this data is the IMF International Financial Statistics database. The IMF has a lot of free data online at their website, but this currency info is a subscription service. I got it from a local university, which has a subscription with the IMF. Because the IMF itself was founded in 1944, we only get postwar data here. I would really like to get pre-1914 currency data at some point.

I mostly did this as a way of thinking about the topic of hyperinflation. I often say that "almost every country in the world, except for the Anglo countries (U.S., Britain, Canada, Australia, New Zealand) has experienced hyperinflation at some point since 1914." But is this true? First: what do we mean by "hyperinflation"? Most English-speaking people don't really have any sense of what this word means. Spanish-speaking people know exactly what it means!

October 13, 2013: What Is "Hyperinflation"?

So, what do we see in the time period since 1949?

This chart shows the exchange rates between various countries and the U.S. dollar, as of the end of the year, compared to the end of the previous year. The cells show "green" if the change in exchange rates is less than 3%, either a rise or a decline. This allows for a bit of a dirty float with the dollar. A rise vs. the dollar of any amount, of more than 3%, is shown in a light blue. (If there is a "rise" of hundreds of percent, that probably indicates a redenomination.) A decline of between 3% and 10% is shown in purple. The blues and purples show currencies that float vs. the dollar but don't get too far out of line in any one year. Declines vs. the dollar of 10% to 50%+ are shown in a sliding scale from light orange to dark red. If a currency declines by 50% vs. the dollar, for example from 5 Mexican pesos per dollar to 10 pesos per dollar (each Mexican peso being worth $0.20 to $0.10, a decline of 50%), this implies an eventual rise in domestic prices of 100% to compensate. We saw earlier that "hyperinflation" tends to begin with about a 100% rise in domestic prices over a period of three years. So, a series of orange-to-red years in a row suggests hyperinflation for that country. A series of light purple boxes suggests consistent devaluation, but not of the "hyper" variety. Still, you can do a lot of damage with a trend of 5%-10% average declines in currency value per year.

There was a lot of turmoil before 1950. There was hyperinflation in Germany, Japan, China, and probably a few other places. Also, both Britain and France devalued their currencies before 1950. Since this was still a time of European empire, a lot of countries that were part of the British Empire (southern Africa, India) or the French Empire (northern and western Africa, Indochina), also devalued.

After 1950, things settle down a lot. This was the Bretton Woods period, when most countries had a currency peg with the dollar (which was in turn pegged to gold at $35/oz.). Nevertheless, there were a few devaluations, as you can see. These tended to be one-time "step" devaluations, not a continuous decline of a floating currency.

In 1971, we see a lot of currencies rise vs. the dollar. The dollar left its gold peg in 1971 and was devalued.

In the 1980s, there are a lot of currency difficulties worldwide, particularly in Latin America.

In the 1990s, there is a lot of currency decline in the former Soviet states, plus the Asian crisis of 1997-98.

Beginning in 2000, declines vs. the dollar become less common, as the dollar itself was losing value during this time (vs. gold), so other currencies tended to do well vs. the dollar.

Despite the supposed "fall in the dollar price of gold" (implied rising dollar) beginning in late 2011 and especially continuing in 2013, other countries' currencies did not fall vs. the dollar.

But, most of all, we see just how many currency crises there have been, throughout the world, especially after 1971. Endless hardship and chaos.




Recent Commentary:


Click Here for the Traditional City/Heroic Materialism Archive
Click Here for the How Banks Work series
Click Here for the NWE Six-Month Ultimate Health and Fitness Program

September 28, 2014: "The Fate of Empires," by Sir John Glubb
September 21, 2014: Japan 2014: "Abenomics" and the Assets of Banks
September 16, 2014: Six Great Things an Independent Scotland Could Do

September 11, 2014: Japan's Graying Population Needs New Solutions, Not Old Failures
September 7, 2014: HTMAPODWTTC 14: Mobile Homes and Manufactured Housing

August 28, 2014: Economic Abundance with a Shrinking Population: Why Not?
August 24, 2014: Summer Slackoff: Ultralight Hiking 2014
August 17, 2014: Gold Holdings of Central Banks and Governments 2: The Larger View, 1850-2000

August 10, 2014: Gold Holdings of Central Banks and Governments, 1913-1941
August 7, 2014: Don't "Kitchen Sink" the Monetary Debate. Gold-Based Money Is Simple.

August 3, 2014: The Reichsbank, 1924-1941
July 27, 2014: The Bank of France, 1914-1941

July 24, 2014: On the Path To a Better Monetary System: Bretton Woods Didn't Fail Because of the "Balance of Payments"

July 20, 2014: The Bank of England, 1914-1941
July 18, 2014: Foreign Exchange Rates 1913-1941 #8: A Brief Summary
July 17, 2014: Devaluations of the 1930s Don't Justify Today's Funny Money Excess
July 13, 2014: HTMAPODWTTC 13: Getting Other People's Cooperation
July 10, 2014: Paul Volcker Dreams of a "New Bretton Woods." But What Would That Look Like?

July 3, 2014: The "Income Inequality" Debate Is Not About Income Inequality
June 22, 2014: Foreign Exchange Rates 1913-1941 #7: Switzerland's Independence; Turkey Avoids Devaluation
June 19, 2014: Explaining "Freaky Friday" -- How the Gold Guys Became Their Own Worst Enemies

June 4, 2014: Health and Fitness 2014: The Rest of Your Life
June 3, 2014: Book Review: Steve Forbes Leads the New Renaissance in Monetary Understanding
June 1, 2014: Foreign Exchange Rates 1913-1941 #6: Hyperinflation in Poland; Russia's WWI Decline

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