Crises are nurseries of better times

In 1932 the world was in a serious crisis. What has since become known in economic history books as the Great Depression had been going on for several years and the situation seemed hopeless and hopeless to many. When the situation calmed down at the end of that decade, the world had changed beyond recognition.

A new world order was a fact, with the British pound no longer being the world's currency and the US dollar taking over that role. Even the monetary system had been radically restructured. From 1931, one country after another abandoned the gold standard, the monetary system in which the national currency is pegged to gold. In 1936, in September of that year, the very last country, the Netherlands, said goodbye to that monetary system. In Germany, the Nazi Party came to power, which turned out to be the harbinger of World War II. At the end of that war, in 1944, the monetary system, which had been without an anchor between 1936 and 1944, was rebuilt. That happened in the American town of Bretton Woods. Another rebuilding took place in 1971, again in the US and not far from Bretton Woods. Since this week is the annual Money Week, I think it is a good time to learn more about money history. 

Most Innovative Decade Ever
Looking back at that period, we see that as miserable as the XNUMXs were. The situation seemed hopeless and hopeless, but it was not. The turbulent years also sparked a rarely seen innovation spurt. Yes, it sounds unbelievable but it is true: the XNUMXs, the Great Depression decade, is one of the most innovative decades ever. 

Foreign? No not really. We humans are very resourceful and that really shows when the situation seems hopeless and hopeless. It is precisely then that we start inventing new things, driven by the desire to benefit from it. It is true what British singer Billy Ocean sang in 1985, namely 'when the going gets tough, the tough get going'. In difficult, hopeless, times we show our most innovative strength. The remnants of that decade are seen almost every day today. The bread slicer, the car radio or the duct tape, they were all invented in the XNUMXs, just to name a few. 

Early start of better times
New opportunities also arose, also in the Netherlands. For example, in 1932 a certain Christiaan Oolders founded a company that acted as an intermediary in the currency, money and capital markets. When 60 years later it was agreed in Maastricht to introduce the euro in 1999, Oolders already saw the mood. Nice, mediate in currencies but what now, now that many currencies would disappear. In 1993 Oolders formed a single company with Voogelaar & Smulders and Heijning & Broersen. That company, OHV Vermogensbeheer, celebrated its 90th anniversary last week as one of the few remaining independent financial institutions in the Netherlands. 

Turbulent times in the past always gave the impetus to new innovations, brought out the ingenuity in man and thus marked the beginning of better times to come. As in 1932, the situation in the world now seems hopeless and hopeless, with high inflation, looming recession and war. But just like in 1932, this will lead to a new innovation spurt, from which we will reap the benefits in the not too distant future. Just like then, there is a good chance that the world of the future will have changed beyond recognition, including new geopolitical relationships and who knows, a new money (system). If history is somewhat normative, then the world is a more pleasant place. One of the things I wonder about is what objects we will use every day in 2032, which originated in this decade.

Edin Mujagic

Edin Mujagić is an economist and manager at Beleggingsfonds Hoofbosch. He focuses on global central banks, and in his blogs he writes mainly about developments in interest rates and inflation. He has also written several books.

© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.