THE EMPERORS WHO BUILT TODAY'S FINANCIAL SYSTEM

With penetrating insights for today, the vital history of the world economic collapse of the late 1920s presents unforgettable portraits of the four men whose personal and professional actions as heads of their respective central banks changed the course of the twentieth century. It is commonly believed that the Great Depression that began in 1929 resulted from a confluence of events beyound anyone person's or government's control.Infact it was the decision taken by a small number of central bankers that were the primary cause of the economic meltdown, the effects of which set the stage for World War 2 and reverberated for decades. Before i continue this discussion on the four men who dominated these decisions, it is important for the benefit of those uninitiated into the world of finance to understand the role of central bank and how it operates especially during the great depression. Central Banks are mysterious Institutions, the full details of their working so arcane that only a handful of outsiders, even economists fully understand them. To hit the nail on the head, a central bank is a bank that has been granted the monopoly over the issuance of currency.This power gives it the ability to regulate the price of credit, interest rates and hence to determine how much money flows through the economy............. Today, i shall introduce you to the neurotic and enigmatic Montagu Norman of the Bank of England! Norman was one of the most eminent bankers in the world, he was admired as a man of character and judgement by financiers and officials of every shade of political opinion.He acquired his reputation for economic and financial perspicacity because he has been so right on many things.Ever since the end of the war, he had been a fervent opponent of exacting reparations from Germany. Throughout the 1920s, he had raised the alarm that the world was running out of gold reserves. Gold had been used as money for mnillennia. As of 1913,over $3billion, a quarter of the currency in circulation around the world then consisted of gold coins, 15% of silver and 60% of paper money. Most of the monetary gold in the world, almost two thirds did not circulate but lay buried in the ground, stacked up in form of ingots in the vaults of banks. In each country, though every bank held some bullion, the bulk of the nation's gold was concentrated in the vaults of central bank and this hidden treasure provided the reserves for the banking system, determined the supply of money and credit within the economy serving as the anchor for the gold standard. Thus paper money was back by the bullion as required by law. In order to control the flow of money into the economy, central banks varied interest rates. It was really like turning the dials up or down a notch on a giant monetary thermometer. Montagu Norman also warned about the dangers of the stock market bubble in the United States. despite his efforts and successes, he had a few enemies such as John Maynards King, and Winston Churchill. TO BE CONTINUED