The Debts of the Lenders: Hard Landing in Vietnam

Often referred to as "the other Communist country", Vietnam has enjoyed nearly a decade of wild growth. However, it looks like the party is about to end. The real estate and stock market bubbles are deflating in the face of soaring inflation and high oil prices. The government has taken steps to curb capital flight by "locking in" foreign investors assets and ...more ominously, imposing capital restraints on gold imports.

Possession of gold is a measure of inflationary risk and its elimination in the US by first FDR and then Nixon served as the precursor to today's floating exchange rate system. Under the gold standard, politicians were forced to abide by an external standard of wealth rather than their own arbitrary statements. The gold system imposed a measure of fiscal restraint on otherwise tax and money printing happy policymakers.


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