© 2019 by Henry Thornton. 

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July 1, 2008

Welcome to the new financial year!

The Bank for International Settlements (BIS) is probably the world's leading authority on global economic trends.

Its degree of courageous dispassion no doubt comes from a comfortable existence in Basel and its long tradition as the cen...

October 2, 2007

Growth of debt has surged in developed nations in the past 30 years.  Now similar growth is occurring throughout the developing world, especially the leading new developers including China, India, Russia and Brazil.

As previously reported, in recent years growth of glob...

January 1, 2002

An Australia day offering on the necessary next wave of economic reform.

Australia is currently “defying the world recession”. This is a result of past economic reform – much of this initiated by the Hawke-Keating Labor government. But our chronically weak dollar is a c...

August 1, 1990

Inflation is theft and it is now widely agreed that inflation is a major underlying cause of Australia's economic malaise. Peter Jonson, former Head of Research at the Reserve Bank of Australia, argues that the costs of curing inflation should be endured for the sake o...

July 1, 1988

1. Introduction. “The essence of central banking is discretionary control of the monetary system.” So said Sir Richard Sayers in his Central Banking After Bagehot. This statement is at the core of my topic. It is one which some find obvious, but that others would dispu...

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The next financial crisis ... is inevitable

The weekend AFR's article reporting the GFC work to save our financial system was interesting. RBA chief Glenn Steven is reported as saying something like: 'We flooded the system with liquidity'. (An action recommended by Bagehot all those years ago.)

Coincidentally, this week's Economist looks at the global equivalent under the heading 'Has finance been fixed?'

It concludes: 'Policymakers have made the economy safer, but they still have plenty of lessons to learn. And fracturing geopolitics make globalised finance even harder to deal with. A decade after Lehman failed, finance has a worrying amount to fix.'

Deep within the article is a statement I have not heard before.

'The Fed acted as lender of last resort to the world, offering foreigners $1trn of liquidity.

[other sources say total swaps were more like $ 11 trn]   Since then, offshore dollar debts have roughly doubled. In the next crisis, America’s political system is unlikely to let the Fed act as the backstop to this vast system, even after Donald Trump leaves the White House.'

This is a truly scary remark.

Comments welcome. Contact Henry here.



Who is Henry

 Henry Then...

"Henry Thornton (1760-1815) was a banker, M.P., philanthropist, and a leading figure in the influential group of Evangelicals that was known as the Clapham set. His 'Enquiry into the Nature and Effects of the Paper Credit of Great Britain (1802)' is an amazing performance. "...it anticipates in some points the analytic developments of a century to come. No other performance of the period will bear comparison with it, though several, among them Ricardo's, met with much greater success at the time as well as later... He was one of those men who see things clearly and who express with unassuming simplicity what they see."

This is the judgment of Joseph Schumpeter, one of the twentieth century's finest economists, in his monumental 'History of Economic Analysis', Allen and Unwin, 1954, p.689.


Henry Now...


Henry Thornton is the nom de plume of a prominent economist. Like his predecessor the modern Henry Thornton has been a banker and an advisor to M.P.s although he is not a politician himself. He is no evangelist but is keenly interested in a wide range of economic, social and political issues... 

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