As long as investors perceive that the United States remains the center of the world’s economy with little risk of default, the United States can continue to benefit from low government bond yields...

How 3 Countries Lost Their Position As The World's Dominant Financial Power Over The Last 800 Years

BY BRYAN TAYLOR,

Global Financial Data has put together an index of government bond yields stretching back seven centuries. This index uses government bond yields from the leading economic powers of each century to measure the long-term changes in government bond yields.


The Changing Center of Financial Power

Over the past eight centuries, the locus of economic power has gradually shifted from Italy to Spain to the Netherlands to Great Britain and currently to the United States. The country at the center of the world’s power and economy issues bonds to cover expenses. Investors in that country and abroad purchase the bonds because they represent the safest bonds that are available for investment.

The country at the center of economic power can issue more bonds at a lower cost because of the lower risk of the world’s economic center. Over time, power ebbs away from that country and investors begin placing their money in the bonds of the new world economic power.


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