The Need for Capital Mobility A third lesson suggested by the historical analysis is that the ability to attract foreign exchange is a critical element of a stable global financial system. In the modern context, I believe that this finding has two corollaries. First, we must avoid blocking capital flows, particularly of long-term funds. There have been policymakers who have advocated capital controls.
At the same time, the process of political union in the United States remained incomplete, as the Civil War in the 1860s manifestly demonstrated. One can even argue that the current constitutional and political set-up of the United States and division of responsibilities between the federal and state governments goes back to the 1930s, the aftermath of the Great Depression.