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Even The Smartest Man in the World Was a Terrible Central Banker

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Simon Black compares The Fed’s unwillingness to do what is necessary to control inflation to the efforts of the great Sir Isaac Newton to stabilise England’s currency in 1696. In both cases, fighting the markets is a fools errand.

By the early Spring of 1696, England was on the brink of a major currency crisis that had been building for decades.

This was back in an era where English money was primarily silver; more than 1,000 years ago, in fact, Britain’s pound sterling was originally struck by Anglo-Saxon kings in the British Isles as one “Tower pound” of sterling silver.

(The ‘Tower pound’ was a medieval unit of measurement roughly equivalent to 0.75 modern pounds.)

But over time, of course, English kings heavily debased their coins and reduced the silver content; by the mid-1600s, the pound only contained about 1/3 its original silver content.


Published: 13 May 2022

From Simon Black in the BFD

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