1997 And All That

The year 1997 is never far from the thoughts of many Thai businessmen and economists. That was the year financial markets forced Thailand to abandon its currency peg, and the Thai baht fell from 26 baht per dollar to 56 baht per dollar. In the US, this devaluation is mainly remembered--if at all--as precipitating the collapse of the once high flying hedge fund Long Term Capital Management. Here in Thailand it is remembered for its domestic consequences, especially the transformation of the Thai economy into one heavily dependent on tourism.

For Thais, 1997 is ripe with meaning--psychological, financial and even metaphysical meaning. The Thais view the events of 1997 in religious terms, as demonstrating the cosmic justice central to Buddhism. Years of unsound economic policy had resulted in the accumulation of bad karma. The painful adjustments that followed were the working out of this imbalance, making merit for past excesses.

It's not quite standard monetary theory but before you laugh at the Thais for their superstitions, remember that a Red Sox fan recently attempted to curse the new Yankee Stadium by burying a David Oritz jersey in the foundations. And the Yankees, as if in competition to prove they are even more superstitious than Sox Nation, formally "excavated" the jersey. And while it might seem odd that the Buddhist Thais have defied the market process that forced them to devalue their dollar, they are hardly the first to incorporate Mammon into their holy pantheon. And the lessons about monetary excess that they've learned serve them well. In fact, sitting in a cafe in Chiang Mai, listening to this theory of time, money and karma, I couldn't help but be reminded of the work of both the Chicago and, especially, Austrian schools. And I wondered if Ben Bernanke might want to take a couple of lessons in Buddhism.

--John Carney, who is in exile in Thailand, thinks superstitions are bad luck.