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Episode 54
Featuring Barry Eichengreen
Barry Eichengreen shares his experience studying currency pegs and exchange rate mechanisms, as we explore how the legacy of globalization, trade liberalization, and the great moderation laid the foundation for the challenges facing the modern economy. Topics include populism, politics, protectionism, monetary history, and global trade.

In the history of human affairs, money has occupied a primacy rivaled only by the word of God. An expedient of civilizations and a progenitor of wars, it has enabled humanity to move mountains along the precipice of its own annihilation. Understanding the history of money and how our system of currency and credit operates is crucial for understanding financial markets and the global economy today.

 

Barry Eichengreen has made a career of studying the history of money and the role that currency has played in the international order. Currency regimes are not fixed in stone. Our current system of floating exchange rates backed by the petrodollar has only been with for the last forty years. Before it, the Western world existed on the gold exchange rate mechanism of Bretton Woods, which lasted for less than thirty years, and whose dissolution lead to a period of high inflation and unemployment that challenged the economic models of the time and put the American economy and political establishment through a decade of frustration, uncertainty, and unrest.

 

However, In the years after the stagflation of the 1970’s and the deregulation of the 1980’s, a period of moderation swept across the Western World. The cost of capital declined, as inflation steadied and markets rose. Developing economies hitched their wagons to the industrialized West, pegging their currencies to the US Dollar, which was seen as the coinage of a New World Order. The Euro project, once a gradual process of integration, was fast-tracked under Maastricht and the reunification of the German Reich. Communist China, humbled by the fall of the Soviet Union and motivated by the riots in Tiananmen Square, set itself down the path towards becoming the growth engine of a new sort of global economy. At the time, many adopted Francis Fukuyama’s phrase, “the End of History,” to describe this period of optimism in the establishment of a neoliberal world order that they hoped would last for the rest of time.

 

Alas, the grand ambitions and lofty ideals of the Washington consensus proved premature. The rush of capital from Western countries into Eastern ones precipitated a series of financial crises beginning in Asia, and ending on the balance sheets of America’s legendary financial institutions, leading to a government-engineered bailout of the country’s investment banks. Eventually, the high-flying stock market of the late 90’s popped in spectacular fashion, and thus began a series of monetary countermeasures, rate cuts, and wealth effects that would lead, inexorably, towards the Great Financial Crisis, a watershed moment in the history of markets whose consequences we have yet to fully reckon with to this very day.

 

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

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Episode 17
Featuring Robert Johnson
Episode 17
Featuring Robert Johnson
Play
Episode 43
Featuring Elizabeth C. Economy
Episode 43
Featuring Elizabeth C. Economy

Barry Eichengreen is the George C. Pardee and Helen N. Pardee Professor of Economics and Professor of Political Science at the University of California, Berkeley, where he has taught since 1987. He is a Research Associate of the National Bureau of Economic Research (Cambridge, Massachusetts) and Research Fellow of the Centre for Economic Policy Research (London, England). In 1997-98 he was Senior Policy Advisor at the International Monetary Fund. He is a fellow of the American Academy of Arts and Sciences (class of 1997).

 

Professor Eichengreen is the convener of the Bellagio Group of academics and economic officials. He has held Guggenheim and Fulbright Fellowships and has been a fellow of the Center for Advanced Study in the Behavioral Sciences (Palo Alto) and the Institute for Advanced Study (Berlin). He is a regular monthly columnist for Project Syndicate.

 

Perhaps, most famously known for this book Golden Fetters: The Gold Standard and the Great Depression (
1919-1939)
, his more recent books are The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era (Oxford University Press, 2018), How Global Currencies Work: Past, Present, and Future with Livia Chitu and Arnaud Mehl (November 2017), The Korean Economy: From a Miraculous Past to a Sustainable Future with Wonhyuk Lim, Yung Chul Park and Dwight H. Perkins (March 2015), Renminbi Internationalization: Achievements, Prospects, and Challenges, with Masahiro Kawai (February 2015), Hall of Mirrors: The Great Depression, The Great Recession, and the Uses--and Misuses--of History (January 2015), From Miracle to Maturity: The Growth of the Korean Economy with Dwight H. Perkins and Kwanho Shin (2012) and Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System (2011) (shortlisted for the Financial Times and Goldman Sachs Business Book of the Year Award in 2011).

 

Professor Eichengreen was awarded the Economic History Association's Jonathan R.T. Hughes Prize for Excellence in Teaching in 2002 and the University of California at Berkeley Social Science Division's Distinguished Teaching Award in 2004. He is the recipient of a doctor honoris causa from the American University in Paris, and the 2010 recipient of the Schumpeter Prize from the International Schumpeter Society. He was named one of Foreign Policy Magazine 's 100 Leading Global Thinkers in 2011. He is a past president of the Economic History Association (2010-11 academic year).

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