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New Netherland inflationary crisis: Difference between revisions
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[[File:NNL Inflation 1930-1985.png|thumb|415x415px|Inflation in New Netherland from 1930-1985]]
The '''New Netherland currency crisis''' was an crisis that occurred in [[New Netherland]] in the late 1970s, characterized by rapid inflation and the emergence of a wage-price spiral. The crisis occurred after a time of rapid economic growth in New Netherland and the adoption of expansive social welfare in the early 20th century, which led to the overheating of the New Netherlander economy. ▼
The '''New Netherland currency crisis''' was an crisis that occurred in [[New Netherland]] in the late 1970s, characterized by rapid inflation and the emergence of a wage-price spiral.
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== Background ==
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=== Impact ===
As inflation soared, purchasing power eroded. Financial instability and uncertainty became pervasive, contributing to unemployment and job insecurity. Social discontent and unrest surged, with protests and demonstrations expressing frustration with the government's handling of the crisis. The people of New Netherland also took a psychological toll, as anxiety over the economy loomed.
The ongoing inflation worsened by [[New Netherland]]'s increased government spending during the [[Alyeskan Independence War]], which New Netherland was a key participant of.
== Causes and explanations ==
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==== Mainstream Leyden school interpretation ====
Economists of the mainstream economic school of thought at the time, the [[Leiden school of economics]], argued that the crisis ultimately stemmed from the divergence from free market principles, largely blaming the labor-friendly government of Edgar and Marieke Guman in the late 1940s to early 1950s. They argued that adoption of interventionist policies, such as expansive social welfare programs and wage regulations, set a dangerous precedent and distorted the market and led to unsustainable growth. They also criticized the consumer-centric policies of the Zeyven Party. All of this was exacerbated by the global energy crises in the 1970s, which put New Netherland's economy further into inflation. Leyden economists suggested that the government should take a more hands-off approach to the economy, allowing it to correct itself towards equilibrium.
==== Chrematic school interpretation ====
{{Main|Chrematic school of economics}}
In response to the rampant inflation, a new school of economic thought emerged, known as [[Chrematic school of economics|Chrematic economics]]. Chrematic economists acknowledged the role of government in contributing to the inflationary trends. However, central to the Chrematic approach was the proposition for greater control over the money supply, diverging from the Leiden school's preference for minimal government intervention in monetary affairs.
===== Decretal money and abandonment of the bimetal standard =====
Anja Blauveldt, a key figure in the development of Chrematic thought, went so far as to advocating for the abandonment of commodity-backed currency in favor of a floating currency system. Blauveldt proposed the concept of "''decretal money''," where the currency's value is backed by government decree rather than being tied to tangible assets like gold or silver. This, according to Blauveldt, would grant the nation the necessary monetary sovereignty and flexibility to effectively combat inflation and adapt to changing economic conditions.
Initially regarded as heterodox and experimental, Chrematic ideas faced skepticism and reluctance from policymakers in the 1960s and 1970s. However, this changed in the 1980s with the election of a new government that embraced Chrematic principles. This government implemented Chrematic ideas, including the adoption of a new currency system, marking a significant departure from traditional economic policies.
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