The Rise and Fall of Nations: Ten Rules of Change in the Post-Crisis World

by Ruchir Sharma

The country will be poised to grow not when the currency starts falling but when it has stabilized again at a cheaper and more competitive value. In many countries, nonetheless, the tendency to equate currency strength with a bright economic future persists. These misunderstandings are not as violent as they were in the twelfth century, when King Henry I ruled England. In 1124, alarmed by the falling value of the English sterling and suspecting a conspiracy, he chose to address the problem by summoning nearly one hundred royal money changers to the palace at Winchester and, in what historian Nicholas Mayhew described as “a very public occasion designed to bolster confidence,” subjected the entire lot to castration or, for the luckier ones, amputation of the right hand.1 Today the understanding of why currencies move the way they do, and what to do about it, has advanced a bit but perhaps not as much as you might expect.