Tuesday, November 4, 2008
Hungarian Hard Times
"On Wednesday, it was Hungary's turn to take desperate measures. As the financial shock that began in the U.S. reached deeper into emerging markets, Hungary's central bank took the dramatic step of raising interest rates by a steep three percentage points in order to prevent a run on its currency", Marcus Walker at the WSJ, 23 October 2008.
This is what central banks did under the pre-1914 gold standard, i.e., raise interest rates to avoid devaluation. Hungary bears watching.