COMMENT: You mentioned that the EU would impose capital controls at the WEC. I was in the banking industry in Sweden. The capital controls that were imposed in 1939 were not lifted until 1989. Not everyone appreciates your depth of knowledge.
SW
REPLY: You are absolutely correct. Sweden introduced wartime exchange controls in 1939. Maintained a strict regime for decades. Once imposed, they claimed that they then prevented money from fleeing during the 1970s inflation crisis. They were entirely removed in 1989.
United Kingdom – Exchange Controls (1939–1979) Imposed at the outbreak of WWII under the Emergency Powers (Defence) Act 1939. They remained in place for 40 years. They restricted foreign currency purchases, overseas investments, and moving capital abroad. They were NOT finally abolished by Thatcher in October 1979.
• Structural debt crisis pressure
Europe faces sovereign-debt fragmentation risk (Italy, France, and even Germany now facing fiscal stress).
When Europe looks weak, capital tends to leave the EU and flow into the U.S., which strengthens the dollar.
• Capital flight from Europe
From our computer perspective, the EU is losing confidence faster than the U.S.
This outflow supports the dollar, not the euro long-term, while short-term the ECB is trying to support the Euro.
