Economic Growth as the Great Equalizer?

A very interesting video by Hans Rosling on how the worlds 200 countries have moved over the last 200 years to higher prosperity and life expectancy. The only issue is that many in the middle are averages, as he points out about china, and its really a straight line if you do finer subdivisions and the whole world will take another couple of centuries to reach the highs enjoyed by the western world today by which time the western world would have moved far far ahead.

I think the promise can only be delivered by technology. If technology can help bring down cost of medication and improve productivity of farms in the world, that will bring everyone up to almost the same level of health and on the basis of essential commodities PPP, also of wealth. My bet is on Technology as the great equalizer.

Money Supply - The Perpetual Problem

It is interesting, this contrast between monetary policy in the west and in the East(Chindia). Probably a very good time for everyone to learn about the fine balance that the Central Bankers need to manage while walking in the dark. And its not like this job became difficult in the last few years, it has been as difficult for centuries.

I've been reading some Roman history, and recently found an interesting passage in Will Durant's classic "Caesar and Christ: A History of Roman Civilization and Christianity from the beginnings to A.D. 325".

The famous “panic” of A.D. 33 illustrates the development and complex interdependence of banks and commerce in the Empire. Augustus had coined and spent money lavishly, on the theory that its increased circulation, low interest rates, and rising prices would stimulate business. They did; but as the process could not go on forever, a reaction set in as early as 10 B.C., when this flush minting ceased. Tiberius rebounded to the opposite theory that the most economical economy is the best. He severely limited the governmental expenditures, sharply restricted new issues of currency, and hoarded 2,700,000,000 sesterces in the Treasury.

The resulting dearth of circulating medium was made worse by the drain of money eastward in exchange for luxuries. Prices fell, interest rates rose, creditors foreclosed on debtors, debtors sued usurers, and money-lending almost ceased. The Senate tried to check the export of capital by requiring a high percentage of every senator’s fortune to be invested in Italian land; senators thereupon called in loans and foreclosed mortgages to raise cash, and the crisis rose. When the senator Publius Spinther notified the bank of Balbus and Ollius that he must withdraw 30,000,000 sesterces to comply with the new law, the firm announced its bankruptcy.

At the same time the failure of an Alexandrian firm, Seuthes and Son due to their loss of three ships laden with costly spices and the collapse of the great dyeing concern of Malchus at Tyre, led to rumors that the Roman banking house of Maximus and Vibo would be broken by their extensive loans to these firms. When its depositors began a “run” on this bank it shut its doors, and later on that day a larger bank, of the Brothers Pettius, also suspended payment. Almost simultaneously came news that great banking establishments had failed in Lyons, Carthage, Corinth, and Byzantium. One after another the banks of Rome closed. Money could be borrowed only at rates far above the legal limit. Tiberius finally met the crisis by suspending the land-investment act and distributing 100,000,000 sesterces to the banks, to be lent without interest for three years on the security of realty. Private lenders were thereby constrained to lower their interest rates, money came out of hiding, and confidence slowly returned.