18 September 2017 Long•Term Asset Return Study: The Next Financial Crisis When the Dollar convertibility ended, the shackles were off and countries no longer had to adhere to strict policies in order to defend their peg to Gold or to the Dollar. The era of global fiat currencies had begun and we moved into a new world order almost totally different to any that had preceded it. With nothing backing paper money, the path to almost unlimited credit creation had begun. Prior to this point, although the strictness of tying currencies to Gold had been slowly diluted, there was always a physical limit to how much money there could be in an economy at any point in time. Over the course of the last 45 years financial market regulation also progressively loosened allowing private sector institutions to create money in a manner never previously seen on such a scale through history. A combination of fiat currencies and ever weakening financial market regulation basically ensured exponential growth in credit and debt creation. This change has made boom and bust cycles more prevalent at a global level and ushered in an era of regular crises, but ones that have so far been tamed by even looser policy and debt/credit growth. A brief walk through the causes of crises of the last 45 years As the 1960s progressed, tensions were starting to build in what was on the surface the most stable global financial system in observable history. The period marked the origination and rise of Eurocurrencies which can be defined as deposits located in banks outside the home market thus allowing banks to bypass capital controls in international lending and planting the seed for the financial system post 1971. Eurocurrencies also allowed banks to circumnavigate home market reserve requirements, interest rate ceilings, deposit insurance and quantitative controls on credit growth. As their use became more widespread they started to impact individual nation's balance of paymen