Currency wars echo the 1930s
Present-day warnings of a "currency war" in which nations compete to push down their currencies carry echoes of the 1930s conflagration that led to a global "Great Depression".
Below are some key moments in the spiral of currency devaluations 80 years ago:
- 1930-1931: Australia and New Zealand, both members of the British Empire, unhook their currencies from the pound sterling as their trade balances are hit by falling agricultural prices and, in Australia's case, prices of natural resources. Australia's pound loses 30 percent of its value against sterling. New Zealand embarks on a currency war with Denmark, its prime rival in butter exports.
- May 1931: Collapse of Austrian bank Creditanstalt, founded by the famous Rothschild family -- considered by many as the spark for the global crisis as it heralds a rash of devaluations around Europe.
- September 21, 1931: Devaluation by Britain, the world's financial centre and top exporter, of the pound sterling. The overvalued pound drops more than 20 percent in one day. Austria, Canada, Norway and Sweden devalue their currencies the same month, followed by Japan in December. France and the United States resist the trend. The United States tries to defend the dollar with respect to the gold standard by raising interest rates. Washington embarks on a wave of protectionism.
-1933: The United States finally abandons the gold standard and the global currency wars begin to subside. In 1934 president Franklin D. Roosevelt decides to devalue the dollar by 40 percent, giving the US economy a boost and lifting the rest of the world with it, helping stabilise global finances.