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Frustrated that the author neglected to elaborate on the crucial detail - the truth behind Iceland's post-2008 "revival" is that it imposed capital controls on
by cbeach 11y ago
Frustrated that the author neglected to elaborate on the crucial detail - the truth behind Iceland's post-2008 "revival" is that it imposed capital controls on its own citizens. It imprisoned their money to avoid "capital flight." This affected everyone. Even students on school trips had to fill out copious government paperwork before exchanging minimal amounts of -their own- money for foreign currency.
I know I'd want to take my earnings and get the hell out, if my government started bowing to leftwing populism and came for the bankers like a medieval pitchfork-waving mob.
Capital controls mean that the "recovery" is completely artificial, and until they're fully lifted we won't know just how deep Iceland's problems really go.
- CuriousSkeptic 11y agoOTOH, Once they gave the money to the banks it's not really "their own" any more. That's part of the problem. people's perception is that having money in a bank account is like having cash in a safety deposit box, which is really not the case, at all. A bank account is just a debt, and just like any debt, the bank can default on it. Interestingly enough there was a report, addressing exactly this problem, for the Icelandic government, by means of "souverign money". An arrangemang much more like the saftey deposit box scenario. https://www.forsaetisraduneyti.is/media/Skyrslur/monetary-reform.pdf https://www.forsaetisraduneyti.is/media/Skyrslur/monetary-re...
- WalterBright 11y agoThe only reason to have capital controls is to try to hide the fact that your money is worth less than the government says it is. The history of such is that a correction, always painful, is inevitable. It's happened even in the US (the gold standard).