An Economic Crisis In Perspective
The Currency Debate and Uncertainty
DOI:
https://doi.org/10.36399/GroundingsUG.10.184Keywords:
Uncertainty, Currency Debate, Bank Act 1844, 1847 Crisis, Currency School, Banking SchoolAbstract
Uncertainty is a powerful concept in many ways, particularly so for economic ideas. The convictions before the financial crisis in 2007-8 that business cycles had been tamed was not the first time neglect of uncertainty proved devastating. This essay discusses the famous Currency controversy in mid-19th century Britain and the failure to take uncertainty into consideration, which ultimately lead to the banking crisis of 1847. The unintended consequences of the Bank Act of 1844 revealed themselves spectacularly in 1847, in the same way convictions about the Great Moderation fell apart in 2007-8.
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