"Back in those days, in the fifties and sixties, countries had balance of payment's deficits or surpluses, those were reflected much more than today in movements of reserves among countries"
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There is a quiet provocation in Solomon's nostalgia for the fifties and sixties: the world economy used to keep score in a way that was harder to ignore. When he says deficits and surpluses were "reflected much more than today" in reserve movements, he's pointing to a time when international imbalances had a physical, almost visible consequence. Gold and foreign-exchange reserves would drain from one central bank and pile up in another. That constraint forced governments to respond. You couldn't indefinitely finance a chronic deficit without watching your reserve cushion thin and your policy options narrow.
The subtext is a critique of what came later: deep private capital markets, floating exchange rates, and a financial system that can recycle imbalances for long stretches without the same alarm bell. In the Bretton Woods era, reserve movements were a kind of disciplinarian. By the late 20th century, they were often drowned out by cross-border flows that could fund deficits without immediate reserve loss, at least until confidence snapped.
Solomon's phrasing also reveals an educator's instinct to demystify macroeconomics. He translates "balance of payments" from a textbook abstraction into a mechanism you can track: reserves shifting hands. It's a reminder that global finance once had more friction and fewer escape hatches. The line lands as both description and warning: when consequences stop showing up on the official balance sheet, they're not gone; they're just deferred, displaced into debt accumulation, asset bubbles, or sudden crises that arrive without the steady drip of reserve depletion to prepare you.
The subtext is a critique of what came later: deep private capital markets, floating exchange rates, and a financial system that can recycle imbalances for long stretches without the same alarm bell. In the Bretton Woods era, reserve movements were a kind of disciplinarian. By the late 20th century, they were often drowned out by cross-border flows that could fund deficits without immediate reserve loss, at least until confidence snapped.
Solomon's phrasing also reveals an educator's instinct to demystify macroeconomics. He translates "balance of payments" from a textbook abstraction into a mechanism you can track: reserves shifting hands. It's a reminder that global finance once had more friction and fewer escape hatches. The line lands as both description and warning: when consequences stop showing up on the official balance sheet, they're not gone; they're just deferred, displaced into debt accumulation, asset bubbles, or sudden crises that arrive without the steady drip of reserve depletion to prepare you.
Quote Details
| Topic | Money |
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