Ackermann, Josef, 123

Adenauer, Konrad, 1, 7, 8, 114

Attali, Jacques, 44, 62, 66

Bastiat, Frédéric, 113

Berlusconi, Silvio, 128

Bitterlich, Joachim, 30

Blüm, Norbert, 61

Bretton Woods, 20–22, 68

Case against the ECB, The, xi

Case against the Fed, The, xi

Charlemagne, 5

classical liberal vision, 1–4, 6, 8, 9, 12

communism, 8

DEEP FREEZE

Iceland’s Economic Collapse

Philipp Bagus

Rey Juan Carlos University

David Howden

St. Louis University—Madrid Campus

Copyright © 2011 by the Ludwig von Mises Institute

Published under the Creative Commons Attribution License 3.0.

http://creativecommons.org/licenses/by/3.0/

Ludwig von Mises Institute

518 West Magnolia Avenue

Auburn, Alabama 36832

Ph: (334) 844-2500

Fax: (334) 844-2583

mises.org

10 9 8 7 6 5 4 3 2 1

ISBN: 978-1-933550-34-3

Foreword

by Toby Baxendale

The two young Professors Bagus and Howden document the sad story of the Icelandic government’s policy mistakes—the artificial creation of a boom, and the savage bust that was the inevitable outcome of this boom.

Graphs

1. Central Bank of Iceland policy rate (percent)

2. Icelandic money supply (January 2000–October 2010, million krónur)

3. Funding gap: big three banks (as at June 2008, in million krónur)

4. Interest rate gap of the CBI to the BoJ, ECB and the Fed (in percent)

5. Euro area, Japanese yen, and U.S. dollar M2 (January 2001 = 100)

6. Net domestic and foreign assets of the banking system (million króna)

7. Foreign funding gap: big three banks (million krónur)

8. Housing prices (2000 = 100)

Tables

1. Corporate debt (percentage of GDP)

2. Icelandic money supply growth (percent)

3. CBI policy rate, inflation and real interest rates (2000–2008)

4. Domestic and Foreign Funding Gaps (million króna, year-on-year percentage)

5. The big three banks’ funding gaps (million ISK)

Chapter 1

Chapter 2