Carmen Reinhart

Paper Promises
by Philip Coggan
Published 1 Dec 2011

Britain has not formally defaulted since 1672, although this record does not apply to its European neighbours. In the nineteenth century, for example, the Austro-Hungarian Empire defaulted or rescheduled its debt five times. In their magisterial study of the subject, This Time Is Different,15 Carmen Reinhart and Kenneth Rogoff describe a cycle of sovereign defaults, with peaks in the Napoleonic Wars, the 1820s through to the 1840s, the 1870s to the 1890s and the Great Depression of the 1930s. Clearly, wars often played their part in this cycle, with defeated nations highly likely to renege on their debts.

…

As Jeremy Grantham of the fund management company GMO has written, ‘Individuals, as well as institutions, were fooled into believing that the market signals were real, that they truly were rich. They acted accordingly, spending too much or saving too little, all the while receiving less than usual from their overpriced holdings.’1 It is not just investors who are fooled. Policymakers can be too. As Carmen Reinhart and Kenneth Rogoff put it, ‘Debt-fuelled booms all too often provide false affirmation of a government’s policies, a financial institution’s ability to make outsized profits or a country’s standard of living. Most of these booms end badly.’2 FORTY YEARS OF BUBBLES The last forty years of economic history (since the collapse of Bretton Woods) have been remarkable.

…

Good debtors, like Britain and the Netherlands, had financial advantages over bad debtors, like eighteenth-century France. Britain’s financial success encouraged other countries to follow its example. But the willingness of countries to follow prudent financial policies proved no more permanent than the willingness of most January revellers to follow their New Year’s resolutions. Carmen Reinhart and Kenneth Rogoff recount that sovereign default has occurred in a number of waves, starting with the Napoleonic Wars.1 In the 1840s cycle, nearly half the countries in the developed world were in default. There was a 1870s to 1890s wave, associated with falling commodity prices, and a 1930s to 1950s phase, linked to the Great Depression and the war.

House of Debt: How They (And You) Caused the Great Recession, and How We Can Prevent It From Happening Again
by Atif Mian and Amir Sufi
Published 11 May 2014

International Monetary Fund, “Chapter 3: Dealing with Household Debt,” in World Economic Outlook: Growth Resuming, Dangers Remain, April 2012. 16. Mervyn King, “Debt Deflation: Theory and Evidence,” European Economic Review 38 (1994): 419–45. 17. Carmen Reinhart and Kenneth Rogoff, “Is the 2007 US Sub-Prime Financial Crisis So Different?: An International Historical Comparison,” American Economic Review 98 (2008): 339–44. 18. Carmen Reinhart and Kenneth Rogoff, This Time Is Different (Princeton, NJ: Princeton University Press, 2009). 19. Oscar Jorda, Moritz Schularick, and Alan M. Taylor, “When Credit Bites Back: Leverage, Business Cycles, and Crisis” (working paper no. 17621, NBER, 2011). 20.

…

Despite focusing on a completely different recession, King found exactly the same relation: Countries with the largest increase in household-debt burdens—Sweden and the United Kingdom, in particular—experienced the largest decline in growth during the recession. Another set of economic downturns we can examine are what economists Carmen Reinhart and Kenneth Rogoff call the “big five” postwar banking crises in the developed world: Spain in 1977, Norway in 1987, Finland and Sweden in 1991, and Japan in 1992.17 These recessions were triggered by asset-price collapses that led to massive losses in the banking sector, and all were especially deep downturns with slow recoveries.

…

In 2011 Harvard economist and president emeritus of the National Bureau of Economic Research Martin Feldstein wrote that the “only real solution” to the housing mess was “permanently reducing the mortgage debt hanging over America.”22 Top economists who met with the president and vice president in 2011 said that the president “could have significantly accelerated the slow economic recovery if he had better addressed the overhang of mortgage debt left when housing prices collapsed.”23 In 2011 Carmen Reinhart concluded that “a restructuring of U.S. household debt, including debt forgiveness for low-income Americans, would be most effective in speeding economic growth.”24 Lessons from History There are sound microeconomic and macroeconomic reasons for government intervention to restructure household debt during a levered-losses episode.

Crisis Economics: A Crash Course in the Future of Finance
by Nouriel Roubini and Stephen Mihm
Published 10 May 2010

Committee on the Global Financial System Paper no. 32, July 2008. Online at http://www.bis.org/publ/cgfs32.pdf?noframes=1. Jorion, Philippe, and Gaiyan Zhang. “Credit Contagion from Counterparty Risk.” Journal of Finance 64 (2009): 2053-87. Kaminsky, Graciela L., and Carmen M. Reinhart. “On Crises, Contagion, and Confusion.” Journal of International Economics 51 (2000): 145-68. Kaminsky, Graciela L., Carmen M. Reinhart, and Carlos A. Vegh. “The Unholy Trinity of Financial Contagion.” Journal of Economic Perspectives 17 (2003): 51-74. Kaufman, Henry. The Road to Financial Reformation: Warnings, Consequences, Reforms. Hoboken, N.J.: John Wiley and Sons, 2009.

…

Keynes is here, as is his most radical interpreter, Hyman Minsky, but so are economists from other camps: Robert Shiller, one of the most visible proponents of behavioral economics; Joseph Schumpeter, the grand theorist of capitalist “creative destruction”; and economists of a historical bent, from Charles Kindleberger to Carmen Reinhart and Kenneth Rogoff. Their disparate strands of thought inform our idiosyncratic approach to understanding crises. When Markets Behave Badly Crisis economics is the study of how and why markets fail. Much of mainstream economics, by contrast, is obsessed with showing how and why markets work—and work well.

…

Kindleberger wrote Manias, Panics, and Crashes in 1978 did someone try to articulate an overarching historical theory of crises. It became a cult classic, and though its conclusions were evidently ignored in the years leading up to the recent disaster, its spirit of inquiry animates much of our thinking. So too does it animate the systematic and rigorous work of Carmen Reinhart and Kenneth Rogoff. In This Time Is Different: Eight Centuries of Financial Folly (2009), these two economists assembled a massive collection of historical data on crises, showing that while the details of currency crashes, banking panics, and debt defaults change, the broader trajectory of crises varies little from decade to decade, century to century.

The Shifts and the Shocks: What We've Learned--And Have Still to Learn--From the Financial Crisis
by Martin Wolf
Published 24 Nov 2015

The weakness of private demand within high-income countries has precluded that and, in particular, the loss of creditworthiness by many households. In all, the legacy of the crises includes deep practical challenges to policymaking almost everywhere. As a result of these unexpected economic developments, crisis-hit countries have been forced to struggle with worse fiscal positions than they had previously imagined. As the work of Carmen Reinhart and Kenneth Rogoff, both now at Harvard University, has shown, fiscal crises are a natural concomitant of financial crises, largely because of the impact on government revenue and spending of declining profits and economic activity, together with rising unemployment. These come on top of the direct fiscal costs of bank bailouts.7 As was to be predicted, in the current crisis the biggest adverse fiscal effects were felt in countries that suffered a direct hit from the financial crises, such as the US, the UK, Ireland and Spain, rather than in countries that suffered an indirect hit, via trade.

…

In fact, it was a pity that a form of ‘sticker shock’ over the scale of the unexpected deficits frightened policymakers into not giving the discretionary fiscal support then needed and, subsequently, as we shall see further below, into premature retrenchment. Nobody should be surprised by the huge fiscal deterioration that followed the crisis. In their seminal book, This Time is Different, Carmen Reinhart and Kenneth Rogoff argue that: ‘Declining revenues and higher expenditures, owing to a combination of bailout costs and higher transfer payments and debt service costs, led to a rapid and marked worsening in the fiscal balance.’48 In fact, they note from an analysis of crises in thirteen countries, the cumulative increase in real public debt was 86 per cent – close to a doubling.49 What happened after 2007 is in line with that prior experience.

…

In the US, austerity was the result of a political stand-off between the two parties. But in the UK it was a deliberate policy.22An influential argument was that the UK had too much public debt, even though the ratio of debt to GDP has remained below its average of the past three centuries. Research by Carmen Reinhart and Kenneth Rogoff, both at Harvard University and celebrated as authors of This Time is Different, a justly influential book on financial and fiscal crises, supported the idea that public debt was becoming dangerously high and so that an early shift towards fiscal austerity was both necessary and wise.

China's Superbank
by Henry Sanderson and Michael Forsythe
Published 26 Sep 2012

The government meanwhile ensures that the Chinese people themselves cannot buy CDB bonds and earn higher yields on their money; the bonds are sold mainly on the interbank market, only to other banks. In China, the rate depositors receive is often below inflation, and the lending rate has been kept below producer prices, meaning that bond market rates have also been kept artificially low. This is a classic example of “financial repression,” as economists describe it.72 As Carmen Reinhart and Kenneth Rogoff put it in their book on financial crises: “Under financial repression, banks are vehicles that allow governments to squeeze more indirect tax revenue from citizens by monopolizing the entire savings and payments system, not simply currency. Governments force local residents to save in banks by giving them few, if any, other options.

…

“Missing Funds Spark Probe of Bank Vice President,” Economic Observer, June 27, 2008, http://www.eeo.com.cn/ens/2008/0627/104454.shtml 71. Gao Jian, Debt Capital Markets in China (Hoboken, NJ: John Wiley & Sons, 2007). 72. Nicholas Lardy, “Financial Repression in China,” Policy Brief 08-8, Peterson Institute for International Economics (September 2008). 73. Carmen Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton, NJ: Princeton University Press, 2009). 74. CDB 2010 Annual Report. Available on their Web site at www.cdb.com.cn 75. Dealbook, “With Barclays, China Continues Overseas March,” July 24, 2007, www.cdb.com.cn/english/NewsInfo.asp?

…

In the 1980s, debt in sub-Saharan Africa doubled, and real per-capita incomes were lower at the end of the period than at the beginning.43 Table 3.3 Africa’s Debt History Country Years of Default and Rescheduling Algeria 1991 Angola 1985 Central African Republic 1981, 1983 Côte d’Ivoire 1983, 2000 Egypt 1984 Kenya 1994, 2000 Nigeria 1982, 1986, 1992, 2001, 2004 South Africa 1985, 1989, 1993 Zambia 1983 Zimbabwe 1965, 2000 Source: Carmen M. Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly. While Chen Yuan’s father, Chen Yun, advocated that China cross the river while feeling for the stones, the West took a different approach to Africa: Countries were urged to implement austerity and liberalize prices all at once.

Austerity: The History of a Dangerous Idea
by Mark Blyth
Published 24 Apr 2013

In all cases, private-sector weaknesses ended up creating public-sector liabilities that European publics now have to pay for with austerity programs that make the situation worse rather than better. The fiscal crisis in all these countries was the consequence of the financial crisis washing up on their shores, not its cause. To say that it is the cause is to deliberately, and politically, confuse cause and effect. We really should know better. Carmen Reinhart and Kenneth Rogoff, no friends of Keynesian policy, note that a banking crisis is followed by a sovereign debt crisis 80 percent of the time.42 Reinhardt and Rogoff stop short of using the word “cause.” However, as Moritz Schularick and Alan Taylor have shown, sovereign debt crises are almost always “credit booms gone bust.”43 They develop in the private sector and end up in the public sector.

…

But the lessons of the 1920s suggest that this will come to an end by prompting one of the other options: devaluation, inflation, or default. Is there a more stable alternative future path? Yes, there are two, and neither is great, but they are, as Churchill said about democracy, the worst options except for the alternatives. The first path is usually known by the pejorative sobriquet of financial repression. Carmen Reinhart and M. Belen Sbrancia recently discussed this possible path.36 They concluded, by examining episodes of past high indebtedness, that states restructure their financial systems in periods of crisis in such a way as to allow them to create “captive audiences.” Banks, pension funds, and other long-term debt holders are “encouraged” through capital controls, interest-rate ceilings, and other devices to hold a large amount of government bonds.

…

“Budget of the United States Government, Fiscal Year 2002,” Executive Office of the President of the United States, 224, table S. 2, http://www.gpo.gov/fdsys/pkg/BUDGET-2002-BUD/pdf/BUDGET-2002-BUD.pdf. 27. Alberto Alesina, “Tax Cuts vs. ‘Stimulus’: The Evidence Is In,” Wall Street Journal, September 15, 2010, Opinion; Carmen M. Reinhart and Kenneth S. Rogoff “Growth in a Time of Debt,” American Economic Review, 100, 2 (2010): 573–578. 28. Timothy Noah, “Introducing the Great Divergence,” Slate, September 3, 2010, Part of a series entitled “The United States of Inequality,” http://www.slate.com/articles/news_and_politics/the_great_divergence/features/2010/the_united_states_of_inequality/introducing_the_great_divergence.html. 29.

Paper Money Collapse: The Folly of Elastic Money and the Coming Monetary Breakdown
by Detlev S. Schlichter
Published 21 Sep 2011

Ben Bernanke, Remarks before the National Economics Club, Washington, DC, Nov. 21, 2002, http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm 2. Carmen M. Reinhart, Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton and Oxford: Princeton University Press, 2009), pp. 204–207. 3. Board of Governors of the Federal Reserve System, http://www.federalreserve.gov/releases/h8/Current/ 4. Federal Reserve Statistical Release H.6 Money Stock Measures, http://www.federalreserve.gov/releases/h6/hist/ 5. Federal Reserve Bank of St. Louis, http://fraser.stlouisfed.org/publications/ERP/page/7254/download/46604/7254_ERP.pdf 6. Carmen M. Reinhart, Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly, p. 207 7.

…

For a historian’s account of these events, see Adam Ferguson, When Money Dies (London: Old Street Publishing, 2010/1975). 19. Peter Bernholz, Monetary Regimes and Inflation, p. 8. 20. Carmen M. Reinhart, Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly, p. 112. 21. Milton Friedman/Anna Jacobson Schwartz, A Monetary History of the United States, 1867–1960, pp. 461–493. 22. Quoted from John Laughland, The Tainted Source, p. 41. 23. Carmen M. Reinhart, Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly, pp. 204–206. Part Five: BEYOND THE CYCLE Paper Money Collapse Chapter 8 The Beneficiaries of the Paper Money System By now we have fully exposed the disadvantages and dangers of elastic money.

…

The inevitable consequences of the new infrastructure and policy have become ever more manifest. Since 1971 the decline in the purchasing power of pound and dollar—two of the oldest currencies in the world—has been the steepest in their long history. Debt levels have risen sharply and the financial industry has greatly expanded. As economists Carmen Reinhart and Kenneth Rogoff demonstrated in their extensive study of financial crises, the number and intensity of international banking crises has risen markedly since 1971.2 Japan experienced an enormous money-driven housing boom in the 1980s and has still not recovered from the dislocations this created.

The Curse of Cash
by Kenneth S Rogoff
Published 29 Aug 2016

Others, led by my colleague Lawrence Summers, argue that there has been a secular decline in global aggregate demand. Personally, I think it is hard to reach any definitive conclusion on where long-run growth is headed, especially since slow growth periods almost invariably follow deep systemic financial crises (as documented in my 2009 book with Carmen Reinhart).4 Even if real interest rates eventually do rise a couple of percentage points to more normal levels, it is now clear that they can sometimes be very low or even negative for sustained periods. Indeed, it is sobering to realize that Japan’s financial crisis began back in the early 1990s, and yet the country is still struggling with the zero bound two decades later.

…

Ben Bernanke has argued forcefully that the right remedy for dealing with debt buildups is so-called macroprudential regulation, for example, putting limits on loan-to-value ratios in housing loans.4 But this is easier said than done. After many years of a long boom, there are strong political economy pressures on regulators to ease up on markets that seem to be doing just fine. Yet it is exactly toward the end of long booms that risks start becoming the greatest, as Carmen Reinhart and I emphasize in our 2009 book on eight centuries of financial crises.5 Beyond that, crafting good financial regulation is not easy, and there will inevitably be important omissions, especially as the private sector will constantly be looking for weak links. The case for using interest rate policy to lean against the wind of a debt-fueled asset-price bubble was perhaps made most eloquently by former Fed governor Jeremy Stein, who said that, unlike macroprudential policy, interest rate policy gets in the “cracks” of the financial system.

…

Judson. 1996. “The Location of US Currency: How Much Is Abroad?” Federal Reserve Bulletin, October. Washington, DC. Reifschneider, David L., and John C. Williams. 2000. “Three Lessons for Monetary Policy in a Low-Inflation Era.” Journal of Money, Credit and Banking 32 (4): 936–66. Reinhart, Carmen M., Vincent Reinhart, and Kenneth S. Rogoff. 2015. “Dealing with Debt.” Journal of International Economics 96, suppl. 1 (July): S43–S55. Reinhart, Carmen M., and Kenneth S. Rogoff. 2002. “The Modern History of Exchange Rate Arrangements: A Reinterpretation.” NBER Working Paper 8963 (June). Cambridge, MA: National Bureau of Economic Research. ———. 2004.

Broken Markets: A User's Guide to the Post-Finance Economy
by Kevin Mellyn
Published 18 Jun 2012

The second category of book involves serious academic research and, at best, the ability to make complex realities simple and interesting. And, unlike the greed-and-corruption literature, they put things in historical context, sometimes centuries. The late Charles Kindleberger was the master in this regard, though for the 2008 crisis This Time Its Different by Ken Rogoff and Carmen Reinhart might represent the gold standard. Certainly the events of the last five years will keep both economists and economic historians busy for generations, as the Great Depression of the 1930s continues to stimulate research and controversy. Like the less substantive financial thrillers, these more serious works tend to leave the “so what?”

…

The good news is that financial repression works in both making high debt levels affordable and in reducing them over time. The bad news is that it massively redistributes wealth from savers and investors to the government. Financial Repression Made Simple In a recent paper for the National Bureau of Economic Research (NBER), The Liquidation of Government Debt (NBER Working Paper 16893, March 2011) Carmen Reinhart and M. Belen Sbrancia make the case that between 1945 and the 1970s, almost all advanced countries practiced “a subtle type of debt restructuring,” financial repression, to achieve “sharp and rapid” reduction of public debt as a portion of their economies. Financial repression has three key pillars: • First, governments directly or indirectly set interest rates that are below what the market would set.

…

The “progressive” view is that debt per se is not a problem if taxes are raised on the 1 percent, although they already carry 40 percent or more of the tax burden. As with many such political standoffs, everybody is wrong. The odds of the US economy growing out of our debt overhang are extremely long if past experience is any guide. Carmen Reinhart and Ken Rogoff studied centuries of financial crises—read their indispensible This Time Is Different (Princeton University Press, 2009) for the full picture—and found that public debt levels began to impede economic growth when they moved above 90 percent of GDP. The mean growth drag was 1 percent, and a 1 percent drag on GDP makes a huge difference in the size of an economy over time.

The Death of Money: The Coming Collapse of the International Monetary System
by James Rickards
Published 7 Apr 2014

Makin, “Trillion-Dollar Deficits Are Sustainable for Now, Unfortunately,” American Enterprise Institute, December 13, 2012, http://www.aei.org/outloook/trillion-dollar-deficits-are-sustainable-for-now-unfortunately. Contrary to the oft-cited . . . : Carmen M. Reinhart and Kenneth S. Rogoff, “Growth in a Time of Debt,” National Bureau of Economic Research, Working Paper no. 15639, January 2010, http://www.nber.org/papers/w15639. “The Liquidation of Government Debt”: Carmen M. Reinhart and M. Belen Sbrancia, “The Liquidation of Government Debt,” National Bureau of Economic Research, Working Paper no. 16893, March 2011, http://www.nber.org/papers/w16893. “A . . . reason why forward guidance may be needed . . .”: Michael Woodford, “Methods of Policy Accommodation at the Interest-Rate Lower Bound,” paper presented at the Federal Reserve Bank of Kansas City Symposium, Jackson Hole, Wyo., August 31, 2012, p. 6, emphasis in the original, http://www.kc.frb.org/publicat/sympos/2012/mw.pdf.

…

Plugging these actual numbers into the PDS framework results in: (2.5 + 1) – 1.5 < 4, or 2 < 4 In this example, real growth plus inflation minus interest expense is less than the primary deficit, which means that debt as a percentage of GDP is increasing. This is the unsustainable condition. Again, what matters in this model is not the level but the trend, as played out in the dynamics of the BRITS and their interactions. Contrary to the oft-cited Carmen Reinhart and Kenneth Rogoff thesis, the absolute level of debt to GDP is not what triggers a crisis; it is the trend toward unsustainability. One beauty of PDS is that the math is simple. Starting with the identity as 2 < 4 means that to achieve sustainability, either the 2 must go up, the 4 must go down, or both.

…

In normal markets, bond buyers would demand higher interest rates to offset inflation, but these are not normal markets. The bond market may want higher nominal rates, but the Fed won’t permit it. The Fed enforces negative real rates through financial repression. The theory of financial repression was explained incisively by Carmen Reinhart and M. Belen Sbrancia in their 2011 paper “The Liquidation of Government Debt.” The key to financial repression is the use of law and policy to prevent interest rates from exceeding the rate of inflation. This strategy can be carried out in many different ways. In the 1950s and 1960s it was done through bank regulation that made it illegal for banks to pay more than a stated amount on savings deposits.

The Globalization Paradox: Democracy and the Future of the World Economy
by Dani Rodrik
Published 23 Dec 2010

By the time it’s all over, the economy will have forfeited, on average, around 20 percent of its GDP.30 None of this should have come as a real surprise. Whenever capital has been free to move around the world, it has produced what the economic historian Charles Kindleberger has memorably called “manias, panics and crashes.”31 Recent research by Carmen Reinhart and Ken Rogoff has quantified what had long been obvious to economic historians. These two economists painstakingly sifted through the historical record to identify every single important instance of banking crisis since 1800. When they superimposed their results on the historic trajectory of capital mobility, they discovered that the two series lined up almost perfectly.

…

For example, when the European economics network VoxEU.org solicited advice from leading economists on how to address the frailties of the global financial system in the wake of the 2008 crisis, the proposed solutions often took the form of tighter international rules administered by some kind of technocracy: an international bankruptcy court, a world financial organization, an international bank charter, an international lender of last resort, and so on.2 Jeffrey Garten, under secretary of commerce for international trade in the Clinton administration, has long called for the establishment of a global central bank.3 Economists Carmen Reinhart and Ken Rogoff have proposed an international financial regulator. These proposals may seem like the naive ruminations of economists who don’t understand politics, but in fact they are often based on an explicit political motive. When Reinhart and Rogoff argue for an international financial regulator, their goal is as much to fix a political failure as it is to address economic spillovers across nations; perhaps the political motive even takes precedence over the economic one.

…

Calvo, “Explaining Sudden Stops, Growth Collapse and BOP Crises: The Case of Distortionary Output Taxes,” in his Emerging Capital Markets in Turmoil: Bad Luck or Bad Policy? (Cambridge, MA: MIT Press, 2005). 30 Laeven and Fabian, “Systemic Bank Crises,” p. 25. 31 Charles P. Kindleberger, Manias, Panics and Crashes: A History of Financial Crises (New York: Basic Books, 1989). 32 Carmen M. Reinhart and Kenneth S. Rogoff, “This Time Is Different: A Panoramic View of Eight Centuries of Financial Crises,” Unpublished paper, Harvard University, April 16, 2008, p. 7 (http://www.economics.harvard.edu/faculty/ rogoff/files/This_Time_Is_Different.pdf). 33 Research at the IMF has shown that the volatility of consumption in the developing economies rose under financial globalization—M.

Britannia Unchained: Global Lessons for Growth and Prosperity
by Kwasi Kwarteng , Priti Patel , Dominic Raab , Chris Skidmore and Elizabeth Truss
Published 12 Sep 2012

If it is really is impossible for countries to go bust, then it is strange that so many countries have failed to pay back their loans. From Edward III defaulting on his loans to Florence financiers in 134039 through to today’s Eurozone crisis, sovereign defaults have been a constant feature throughout history. In their definitive text, This Time is Different, economists Carmen M. Reinhart and Kenneth S. Rogoff list hundreds of examples of default through the last 800 years. Default is not just not unknown, it is endemic. Only a small number of countries – such as Australia, New Zealand, Canada, Denmark, Thailand and the United States40 – have never defaulted. The UK has been relatively fortunate in past centuries, but it too defaulted.

…

Macaulay, History of England. 30. http://krugman.blogs.nytimes.com/2011/12/04/british-debt-history/ 31. http://krugman.blogs.nytimes.com/2011/11/30/bleeding-britain/ 32. http://johannhari.com/2011/03/29/the-biggest-lie-in-british-politics/ 33. http://www.ft.com/cms/s/0/a9042452-1a3c-11de-9f91-0000779fd2ac. html#axzz1gJPBneNS 34. http://www.newstatesman.com/blogs/david-blanchflower/2011/06/creditcard-cameron-basic 35. Niall Ferguson, The Cash Nexus: Money and Power in the Modern World, 1700–2000 (Penguin, 2001), p. 53. 36. Ferguson, The Cash Nexus, p. 129. 37. Ferguson, The Cash Nexus, p. 130. 38. Office for Budget Responsibility, Economic and Fiscal Outlook, March 2012. 39. Carmen Reinhart and Kenneth Rogoff, This Time is Different: Eight Centuries of Financial Folly (Princeton University Press, 2009). 40. Reinhart and Rogoff, This Time is Different. 41. http://www.thedailybeast.com/newsweek/2009/11/27/an-empire-at-risk.html 42. http://www.thedailybeast.com/newsweek/2009/11/27/an-empire-at-risk.html 43.

Them And Us: Politics, Greed And Inequality - Why We Need A Fair Society
by Will Hutton
Published 30 Sep 2010

The country is not prepared for, and does not understand, the degree of swingeing reduction that the coalition government plans. The international environment, plagued by sovereign debt crises and growing assertive national self-interest, is hardly a source of comfort. These are difficult times. Britain is going to be much poorer than it anticipated just a few years ago. Two American economists, Carmen Reinhart and Ken Rogoff, have assessed the aftermath of credit explosions and financial crashes in sixty-seven countries. They paint a sober picture of prolonged loss of output, high unemployment and depressed asset prices, and warn that there is no precedent for what happens after the kind of global crisis through which we have just lived.1 Earlier, I cited Andrew Haldane’s estimates of cumulative lost output, which had a best-case scenario of £1.4 trillion.

…

Equally problematic is determining a sustainable level of public debt, which is certain to rise to maintain economic activity in almost every country as private debt starts to fall. Most countries can handle public debt up to 90 per cent of GDP; above that level, the ratio of debt service to any reasonable level of tax receipts as a share of GDP starts to nudge above 10 per cent, which causes problems for most states over time. Carmen Reinhart and Kenneth Rogoff say that once ratios of public debt to GDP exceed 90 per cent, median growth rates fall by 1 per cent a year, but there is no association between growth and public debt below 90 per cent.5 Indeed, if rising public debt is associated with an increase in capital investment, it can even stimulate growth rates.

…

See also Julia Jones, Piyamas Nanork and Benjamin Oldroyd (2007) ‘The Role of Genetic Diversity in Nest Cooling in a Wild Honey Bee, Apis florea’, Journal of Comparative Physiology a-Neuroethology Sensory Neural and Behavioral Physiology 193 (2): 159–65. 55 Dean Amel, Colleen Barnes, Fabio Panetta and Carmelo Salleo (2004) ‘Consolidation and Efficiency in the Financial Sector: A Review of the International Evidence’, Journal of Banking and Finance 28: 2493–519. 56 ACT Response to the Turner Review of Banking Regulation, at http://www.treasurers.org/reviewbankingregulation/actresponse/0609. 57 Peter Boone and Simon Johnson, ‘Bernanke on Banking’, Economix, 19 October 2009, at http://economix.blogs.nytimes.com/2009/10/29/bernankeon-banking/. 58 Manmohan Singh (2010) ‘Collateral, Netting and Systemic Risk in the OTC Derivatives Market’, IMF Working Paper No. 10/99. 59 Michael Lewis (2010) The Big Short: Inside the Doomsday Machine, Allen Lane. Chapter Eight: The £5 Trillion Mistake 1 Carmen Reinhart and Kenneth Rogoff (2010) This Time is Different, Princeton University Press. 2 HM Treasury (2009) Pre-Budget Report 2009: Securing the Recovery: Growth and Opportunity, HMSO. See also Martin Wolf, ‘Britain’s Dismal Choice: Sharing the Losses’, Financial Times, 15 December 2009, at http://www.ft.com/cms/s/0/f693b6a4-e9af-11de-9f1f-00144feab49a,s01=1.html. 3 OECD (2009) OECD Factbook, OECD, with Treasury figures and estimates for 2008 and 2009. 4 Robert Chote, Carl Emmerson and Jonathan Shaw (eds) (2010) The Institute for Fiscal Studies Green Budget, IFS. 5 Francesco Guerrera, ‘Welch Denounces Corporate Obsessions’, Financial Times, 13 March 2009, at http://www.ft.com/cms/s/0/3ca8ec2e-0f70-11de-ba10-0000779fd2ac.html. 6 Max Hastings, ‘The End of Britain’s Long Weekend’, Financial Times, 20 December 2009, at http://www.ft.com/cms/s/0/1e9f7cdc-ed8e-11de-ba12-00144feab49a.html. 7 Internal Cabinet Office analysis. 8 Chris Giles, ‘Manufacturing Fades under Labour’, Financial Times, 2 December 2009, at http://www.ft.com/cms/s/0/f32a3392-df7a-11de-98ca-00144feab49a.html. 9 Leonard Trelawny Hobhouse (1911) Liberalism, at socserv.mcmaster.ca/econ/ugcm/3ll3/hobhouse/liberalism.pdf. 10 Buffett, Gates and Simon are all cited in Gar Alperovitz and Lew Daly (2008) Unjust Deserts: How the Rich Are Taking Our Common Inheritance and Why We Should Take It Back, The New Press. 11 Antonio Afonso, Ludger Schuknecht and Vito Tanzi (2005) ‘Public Sector Efficiency: An International Comparison’, Public Choice 123 (3–4): 321–47.

The Production of Money: How to Break the Power of Banks
by Ann Pettifor
Published 27 Mar 2017

After liberalisation took hold in the 1970s, and as profits fell relative to earlier periods, unemployment rose across the world and wages declined as a share of GDP. Inequality exploded. Globally private debt expanded and exceeded global income. And financial crises proliferated as Professor Ken Rogoff and Carmen Reinhart have shown. Trust and confidence in the banking system and in democratic and other public institutions waned. The reason is not hard to understand. The transfer of economic power away from public authority to private wealthy elites had placed key financiers beyond the reach of the law, of regulators or politicians.

…

This loss of democratic power hollowed out democratic institutions – parliaments and congresses – while ‘privatisation’ diminished whole sectors of the economy that had been subject to democratic oversight. Source: This Time is Different: A Panoramic View of Eight Centuries of Financial Crises by Carmen M. Reinhart, University of Maryland and NBER; and Kenneth S. Rogoff, Harvard University and NBER. Fig. 1. Financial crises during periods of high capital mobility after financial liberalisation. The economics profession and the universities stood aloof, as enormous power was concentrated in the hands of small groups of reckless financiers.

…

But debts have to be repaid from income, whether the form of income comes as wages, salaries, profits or tax revenues. If rates of interest are too high, debtors have to raise the funds for debt repayment by increasing rates of profit, and by the further extraction of value. Source: This Time is Different: A Panoramic View of Eight Centuries of Financial Crises by Carmen M. Reinhart, University of Maryland and NBER; and Kenneth S. Rogoff, Harvard University and NBER. Fig. 2. Illustrations of different growth patterns. These pressures to increase income at exponential rates for the repayment of debt implies that both labour and the land (defined broadly) have to be exploited at ever-rising rates.

Breakout Nations: In Pursuit of the Next Economic Miracles
by Ruchir Sharma
Published 8 Apr 2012

The growing ties between nations over the last decade have made every one of them less inclined to allow their trade partners to go under. For all the current discussion about debt defaults, stemming from the crisis in Greece, the reality is that default has largely disappeared from the international economic scene. In their book, This Time Is Different, Carmen Reinhart and Kenneth Rogoff chart how surprisingly commonplace default used to be: In a typical year between the 1920s and 2003, nations representing at least 5 to 10 percent of global income were in default, and that proportion spiked up to 40 percent during the Depression and World War II, and close to 15 percent in the late 1980s.

…

The high debt burden is indeed weighing on the long-term U.S. growth rate, which is widely believed to have fallen from 3.4 percent between 1950 and 2007 to 2 percent, which is slower than during the recovery phase of most postwar recessions. There is a widespread sense that America has lost its mojo. In a recent paper, however, Harvard economists Carmen Reinhart and Kenneth Rogoff point out that the relevant comparison is not previous U.S. recessions but the very different case of systemic financial crises. These are much more traumatic and rare, and by this standard the United States is recovering lost per capita output faster than it did following previous systemic crises, from the meltdown of 1873 through the Great Depression, and faster than most Western nations following the systemic crisis of 2008.

13 Bankers: The Wall Street Takeover and the Next Financial Meltdown
by Simon Johnson and James Kwak
Published 29 Mar 2010

Quoted in Wessel, In Fed We Trust, supra note 3, at 23. 25. Sorkin, Too Big to Fail, supra note 2, at 2. 26. Troubled Asset Relief Program Office of the Special Inspector General, Quarterly Report to Congress, April 21, 2009. 27. See Carmen M. Reinhart and Kenneth S. Rogoff, “Is the 2007 U.S. Subprime Crisis So Different? An International Historical Comparison,” American Economic Review 98 (2008): 339–44; and Carmen M. Reinhart and Kenneth S. Rogoff, “The Aftermath of Financial Crises” (paper presented at the meetings of the American Economic Association, January 3, 2009), available at http://www.aeaweb.org/annual_mtg_papers/2009/retrieve.php?

…

In January 2008, just as the economy was tipping into recession, the Congressional Budget Office (CBO) projected that, by the end of 2018, U.S. government debt would fall to $5.1 trillion, or 22.6 percent of GDP. Surveying the wreckage in August 2009, the CBO projected that debt at the end of 2018 would rise to $13.6 trillion, or 67.0 percent of GDP—a difference of $8.5 trillion.78 This should come as no surprise; Carmen Reinhart and Kenneth Rogoff have shown that, on average, modern banking crises lead to an 86 percent increase in government debt over the three years following the crisis.79 The financial crisis and the government’s emergency response also increased the likelihood of two bleak scenarios. First, the enormous amount of liquidity that the Federal Reserve poured into the economy created the long-term potential for high inflation; if the Fed cannot “mop up” that liquidity when the economy recovers, all that excess money could make dollars less valuable, driving up prices.

…

Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2008 to 2018, January 2008, available at http://cbo.gov/ftpdocs/89xx/doc8917/01–23–2008_BudgetOutlook.pdf; Congressional Budget Office, The Budget and Economic Outlook: An Update, August 2009, available at http://cbo.gov/ftpdocs/105xx/doc10521/08–25-BudgetUpdate.pdf. 79. Carmen M. Reinhart and Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton: Princeton University Press, 2009), 231–32. 80. Maura Reynolds and Janet Hook, “Critics Say Bush Is Not Doing Enough,” Los Angeles Times, March 18, 2008, available at http://articles.latimes.com/2008/mar/18/nation/na-bush18; cited in Sorkin, Too Big to Fail, supra note 2, at 38. 81.

The Age of Stagnation: Why Perpetual Growth Is Unattainable and the Global Economy Is in Peril
by Satyajit Das
Published 9 Feb 2016

Similarly, expansionary fiscal policy in an environment of contracting private sector demand and reduction in debt can result in lower multipliers, as the government cannot fully offset the fall in private economic activity. Budget deficits must be financed, requiring governments to borrow. By 2009, there was increasing unease about rising government debt. Based on data from hundreds of years of financial crises, economists Carmen Reinhart and Kenneth Rogoff argued that sovereign debt levels above 60–90 percent of GDP affected growth.5 In 2013, in the academic equivalent of Fight Club, three economists from the University of Massachusetts in Amherst published a paper alleging that Reinhart and Rogoff had exaggerated the decline in growth at higher debt levels, due to unorthodox statistical choices and a spreadsheet error.

…

But the trend has reversed in recent decades, ushering in the return of patrimonial capitalism. Based on his research, Professor Piketty derives his fundamental law of capitalism: where the rate of return to wealth (r) grows faster than economic output (g) (r > g), it leads to a concentration of wealth. Echoing the controversy around Carmen Reinhart and Kenneth Rogoff, the Financial Times raised doubts about Piketty's data, suggesting errors and questionable selection and analysis. Corrected for these errors, they argued, the conclusions of rising wealth inequality were flawed. But irrespective of the accuracy of the data, interpreting and extrapolating from information spanning centuries, in countries with different economic and social structures, is inherently difficult.

…

Lazear, Economic Imperialism, Hoover Institution and Graduate School of Business, Stanford University, May 1999. http://faculty-gsb.stanford.edu/lazear/personal/pdfs/economic%20imperialism.pdf. 2 John Maynard Keynes, General Theory of Employment, Interest and Money, Atlantic Publishers & Distributors (1936) 2006, p. 272. 3 Raghuram Rajan, “The Paranoid Style in Economics,” Project Syndicate, 8 August 2013. www.project-syndicate.org/commentary/the-declining-quality-of-public-economic-debate-by-raghuram-rajan. 4 G. K. Chesterton, Orthodoxy, Chapter VI, 1908. http://en.wikiquote.org/wiki/G._K._Chesterton. 5 Carmen M. Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly, Princeton University Press, 2009. 6 See Patrick Bernau, “‘Eine Hexenjagd’—Keneth Rogoff Über seinen Excel-Fehler,” Fazit, 22 October 2013. http://blogs.faz.net/fazit/2013/10/22/kenneth-rogoff-ueber-excel-fehler-hexenjagd-2818/. 7 Frederic Mishkin, “The Economist's Reply to the ‘Inside Job,’” Financial Times, 8 October 2010. 8 Quoted in Robert John, “Behind the Balfour Declaration: Britain's Great War Pledge to Lord Rothschild,” The Journal of Historical Review, vol. 6, no. 4 (Winter 1985–6), pp. 389–450. 9 See Neil Irwin, “With Consumers Slow to Spend, Businesses Are Slow to Hire,” Washington Post, 21 August 2010. 10 Tim Duy, “Yes, I Am Optimistic,” 30 November 2014. http://economistsview.typepad.com/timduy/2014/11/yes-i-am-optimistic-1.html. 11 Wynne Godley, “Macroeconomics without Equilibrium or Disequilibrium,” The Jerome Levy Economics Institute, Working Paper No. 205, August 1997. www.levyinstitute.org/pubs/wp205.pdf. 12 Olivier Blanchard, “Monetary Policy Will Never Be the Same,” IMF Direct, 19 November 2013. http://blog-imfdirect.imf.org/2013/11/19/monetary-policy-will-never-be-the-same/. 13 Fyodor Dostoyevsky, trans.

Economics Rules: The Rights and Wrongs of the Dismal Science
by Dani Rodrik
Published 12 Oct 2015

If instead government is hopelessly corrupt, industrial policy will likely make things worse. Note how, in this case, research has pushed the disagreement onto a domain—public administration—in which economists have no particular expertise. Models, Authority, and Hierarchy Two well-known economists, Carmen Reinhart and Kenneth Rogoff, published a paper in 2010 that would become fodder in a political battle with high stakes.18 The paper appeared to show that public-debt levels above 90 percent of GDP significantly impede economic growth. Conservative US politicians and European Union officials latched on to this work to justify their ongoing call for fiscal austerity.

…

Itzhak Gilboa, Andrew Postlewaite, Larry Samuelson, and David Schmeidler, “Economic Models as Analogies” (unpublished paper, January 27, 2013), 6–7. 17. See, for example, my online debate for the Economist magazine with Harvard Business School professor Josh Lerner, July 12–17, 2010, http://www.economist.com/debate/debates/overview/177. 18. Carmen M. Reinhart and Kenneth S. Rogoff, Growth in a Time of Debt, NBER Working Paper 15639 (Cambridge, MA: National Bureau of Economic Research, 2010). 19. Thomas Herndon, Michael Ash, and Robert Pollin, “Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff” (Amherst: University of Massachusetts at Amherst, Political Economy Research Institute, April 15, 2013). 20.

The Classical School
by Callum Williams
Published 19 May 2020

Under the cooperative system the workers would own the capital that they worked with, rather than working on someone else’s capital. So all the value created in the production process would end up accruing to the workers in their joint role as labourers and owners. Chapter 10–Jean-Baptiste Say (1767–1832) 1. This is an estimate from Kenneth Rogoff and Carmen Reinhart’s database. 2. For this biographical information I am grateful to William Baumol’s research. 3. No relation to David, unfortunately. 4. As Joseph Schumpeter points out, in the United States a professorship of Moral Philosophy and Political Economy was founded at Columbia in 1818. 5. The figures for France are an estimate compiled from different sources, which may affect comparability. 6.

…

He basically argues that the amount of invested capital does not vary all that much between industries. This is where George Stigler’s characterisation of Ricardo as proposing a “93% labour theory of value” comes from. 14. Rothbard’s analysis of the Marx–Engels intellectual tangle is particularly interesting. Chapter 16–Friedrich Engels (1820–1895) 1. These estimates are from Carmen Reinhart and Kenneth Rogoff’s database. 2. Stalin argued that “[t]o keep on strengthening state power in order to prepare the conditions for the withering away of state power–that is the Marxist formula.” Chapter 17–William Stanley Jevons (1835–1882) 1. It is not a settled question who was the first person to suggest “economics” in place of “political economy”.

No Ordinary Disruption: The Four Global Forces Breaking All the Trends
by Richard Dobbs and James Manyika
Published 12 May 2015

In this new macroeconomic territory, a traditional view of supply and demand fundamentals may no longer be a sufficient indicator for the future cost of capital. As illustrated by the European Central Bank’s move in the spring of 2014 to lower its benchmark deposit interest rate below zero, ultralow interest rates may remain the norm over the coming years.43 As economists Carmen Reinhart and Kenneth Rogoff argued in a 2013 IMF paper, policy makers need to guard against overplaying the risks related to unconventional monetary support and limiting central banks’ room for policy maneuvering.44 HOW TO ADAPT As demand-supply dynamics change, business leaders need to be prepared to navigate both worlds.

…

Hiroko Tabuchi, “In Japan, a tenuous vow to cut,” New York Times, September 1, 2011, www.nytimes.com/2011/09/02/business/global/japan-seeks-answers-to-debt-load-without-angering-voters.html?Pagewanted=all&_r=0. 43. Ben Chu, “European Central Bank imposes negative rates on banks in historic move,” Independent (London), June 5, 2014, www.independent.co.uk/news/business/news/european-central-bank-imposes-negative-rates-on-banks-in-historic-move-9494027.html. 44. Carmen M. Reinhart and Kenneth S. Rogoff, Financial and sovereign debt crises: Some lessons learned and those forgotten, IMF working paper no. 13/266, December 2013, www.imf.org/external/pubs/ft/wp/2013/wp13266.pdf. 45. Global Benchmark of Cost and Schedule Performance for Mega Projects in Mining, McKinsey & Company, 2013. 46.

…

Richard Dobbs, Jeremy Oppenheim, Fraser Thompson, Sigurd Mareels, Scott Nyquist, and Sunil Sanghvi, Resource revolution: Tracking global commodity markets, McKinsey Global Institute, September 2013. 27. Richard Dobbs, Jeremy Oppenheim, Fraser Thompson, Marcel Brinkman, and Marc Zornes, Resource revolution: Meeting the world’s energy, materials, food, and water needs, McKinsey Global Institute, November 2011. 28. Carmen M. Reinhart and Kenneth S. Rogoff, “From financial crash to debt crisis,” American Economic Review 101, no. 5, August 2011, www.aeaweb.org/articles.php?doi=10.1257/aer.101.5.1676; also see David Beers and Jean-Sébastien Nadeau, Introducing a new database of sovereign defaults, Bank of Canada, technical report no. 101, February 2014. 29.

Expected Returns: An Investor's Guide to Harvesting Market Rewards
by Antti Ilmanen
Published 4 Apr 2011

Sustained inflation only became pervasive in the 20th century: Median inflation rate (5-year moving average) for all countries, 1500–2010. Sources: Carmen M. Reinhart and Kenneth S. Rogoff (2008), “This time is different: A panoramic view of eight centuries of financial crises,” NBER working paper 13882, March 2008. Carmen M. Reinhart (2010), “This time is different chartbook: Country histories on debt, default, and financial crises,” NBER working paper 15815. Reproduced by permission of Carmen M. Reinhart and Kenneth S. Rogoff. During the gold standard (Britain adopted it in 1717, other developed countries in the 19th century), inflations and deflations took turns with no persistence, and long-run inflation expectations were likely near zero most of the time.

…

After a quarter-century when bearing duration risk was amply rewarded, Treasuries may provide neither safety nor performance in the coming decade. Figure 27.6. Global perspective on inflation and external default histories. Source: Carmen M. Reinhart and Kenneth S. Rogoff (2008), “This time is different: A panoramic view of eight centuries of financial crises,” NBER working paper 13882. Reproduced by permission of Carmen M. Reinhart and Kenneth S. Rogoff. Figure 27.7. Sovereign CDS spreads, July 2007–July 2010. Source: Bloomberg. Finally, the last innings of the debt supercycle may arrive even before the demographic costs balloon.

…

I especially thank Elroy Dimson, Paul Marsh, and Mike Staunton for the use of their 110-year-long return histories and Robert Arnott for even older data used in Arnott–Bernstein (2002). I am grateful to Michael Afreh (Nomura), Andrew Ang, David Blitz (Robeco), Giuliano de Rossi (UBS), Eric Falkenstein, Kenneth Froot, Robin Greenwood, Campbell Harvey, Sharon Kozicki, Carmen Reinhart, Matti Suominen, Arthur Warga, and Mungo Wilson for sending me some of their research data. I also thank Professors Kenneth French, Morris Davis, Amit Goyal, Lubos Pastor, Robert Shiller, Stephen Wilcox, and Jeffrey Wurgler for data available on their websites. Finally, a few graphs are directly extracted from other works, as credited below them: Figures 9.8 Rosenberg–Maurer, 17.4 Reinhart–Rogoff, 18.1 Hasbrouck, 18.2 Naes–Skjeltorp–Odegaard, 19.7 Buraschi–Kosowski–Trojani, 19.9 Frazzini–Pedersen, 27.6 Reinhart–Rogoff.

The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality
by Brink Lindsey
Published 12 Oct 2017

The problem of regressive regulatory rents is much bigger than these specific instances, but we hope that a close look at these instances will suffice to give a well-grounded appreciation of how widespread and serious the problem has become. 3 FINANCE IN ANY SEARCH FOR POLICIES that slow growth and drive inequality, financial regulation is an obvious place to start. After all, the financial sector was Ground Zero for the worst economic crisis to hit this country since the Great Depression. As Harvard economists Carmen Reinhart and Kenneth Rogoff have documented, financial crises are terrible for growth because recoveries from them are generally slow and arduous.1 The US experience since the bursting of the housing bubble certainly jibes with Reinhart and Rogoff’s analysis, as the expansion in the aftermath of the Great Recession has been the slowest on record since World War II.

…

Carew, “Regulatory Improvement Commission: A Politically Viable Approach to U.S. Regulatory Reform,” Progressive Policy Institute Policy Memo, May 2013, http://www.progressivepolicy.org/wp-content/uploads/2013/05/05.2013-Mandel-Carew_Regulatory-Improvement-Commission_A-Politically-Viable-Approach-to-US-Regulatory-Reform.pdf. Chapter 3 1.See Carmen M. Reinhart and Kenneth S. Rogoff, This Time It’s Different: Eight Centuries of Financial Folly (Princeton, NJ: Princeton University Press, 2011). 2.See Tyler Atkinson, David Luttrell, and Harvey Rosenblum, “How Bad Was It? The Costs and Consequences of the 2007–09 Financial Crisis,” Federal Reserve Bank of Dallas Staff Paper no. 20, July 2013, https://dallasfed.org/assets/documents/research/staff/staff1301.pdf. 3.See Jon Bakija, Adam Cole, and Bradley T.

The Price of Everything: And the Hidden Logic of Value
by Eduardo Porter
Published 4 Jan 2011

What’s more, whatever we do to prevent financial turmoil, we must acknowledge an important limitation: we are unlikely to stamp out bubbles and crashes entirely. Financial crises spawned by investment surges, credit booms, and asset bubbles appear to be a standard feature of the landscape of capitalism. Economists Carmen Reinhart and Kenneth Rogoff found that of the world’s sixty-six major economies—including developed nations and the largest developing countries—only Portugal, Austria, the Netherlands, and Belgium had avoided a banking crisis between 1945 and 2007. By the end of 2008 no country was unscathed. Every time investors become enthusiastic about some new investment proposition, they assure us that this time will be different.

…

Lansing, “Speculative Growth, Overreaction, and the Welfare Cost of Technology-Driven Bubbles,” Federal Reserve Bank of San Francisco Working Paper, August 2009 (www.frbsf.org/publications/economics/papers/2008/wp08-08bk.pdf, accessed 08/08/2010); and James Edward Meeker, The Work of the Stock Exchange (New York: The Ronald Press Company, 1922), p. 419. The tally of countries that have escaped banking crises is by Carmen Reinhart and Kenneth Rogoff, “Banking Crises: An Equal Opportunity Menace,” NBER Working Paper, December 2008. 236-239 What Rationality?: Eugene Fama’s quote is in Douglas Clement, “Interview with Eugene Fama,” The Region, Federal Reserve Bank of Minnesota, December 2007. Keynes’s quote is in John Maynard Keynes, The General Theory of Employment, Interest and Money (New York: Harcourt Brace and World, 1965), p. 161.

Better, Stronger, Faster: The Myth of American Decline . . . And the Rise of a New Economy
by Daniel Gross
Published 7 May 2012

The weight of history suggested that the United States, overextended and debt-ridden, was likely to suffer the same fate in the early twenty-first century that befell the British Empire in the mid-twentieth. “It’s not a thousand years that separates imperial zenith from imperial oblivion,” he said in a May 2010 speech. “It’s really a very, very short ride from the top to the bottom.”1 Kenneth Rogoff and Carmen Reinhart, economists who data-mined history in This Time Is Different, a comprehensive look at financial debacles going back to the 1300s, arrived at a similar conclusion. Centuries worth of data on finance-induced crises suggest the United States won’t be bouncing back any time soon, they concluded. The moment Barack Obama was sworn in as president, a wave of economic declinism swamped the political right.

…

These recessions were unusually shallow too, with 1.49 and 0.62 percent declines in output from peak to trough, respectively.7 The only contraction worse than the one we just lived through was the Great Depression, a forty-three-month doozy that ran from August 1929 to March 1933. Our balance sheets, bank accounts, egos, and psyches simply weren’t prepared for the depth and degree of shrinkage. Or for the slowness of the recovery. As Kenneth Rogoff and Carmen Reinhart document in This Time Is Different, not all recessions are created equal. Economies recover relatively quickly from downturns that are natural outcomes of the business cycle. Having produced too much or too exuberantly, companies idle capacity until inventories are worked down, and then reopen factories when demand rises again.

Makers and Takers: The Rise of Finance and the Fall of American Business
by Rana Foroohar
Published 16 May 2016

On top of this, it’s quantitatively increasing market volatility and risk of the sort that wiped out $16 trillion in household wealth during the Great Recession.59 Evidence shows that the number of wealth-destroying financial crises has risen in tandem with financial sector growth over the last several decades. In their book This Time Is Different: Eight Centuries of Financial Folly, academics Carmen Reinhart and Kenneth Rogoff describe how the proportion of the world affected by banking crises (weighed by countries’ share of global GDP) rose from some 7.5 percent in 1971 to 11 percent in 1980 and to 32 percent in 2007.60 And economist Robert Aliber, in updating one of the seminal books on financial bubbles, the late Charles Kindleberger’s Manias, Panics, and Crashes: A History of Financial Crises, issued a grave warning in 2005, well before the 2008 meltdown: “The conclusion is unmistakable that financial failure has been more extensive and pervasive in the last thirty years than in any previous period.”61 This is a startling illustration of how finance has transitioned from an industry that encourages healthy risk taking to one that simply creates debt and spreads unproductive risk in the market system as a whole.

…

Locke, Ruchir Sharma, Gautam Mukunda, Saule Omarova, Eileen Appelbaum, and Sherle Schwenninger. Thanks also to the many academics and policy thinkers whose research I relied heavily on, including but not limited to: Greta Krippner, Moritz Schularick, Alan M. Taylor, Robin Greenwood, David Scharfstein, Raghuram G. Rajan, Carmen Reinhart, Ken Rogoff, Thomas Philippon, Robert Atkinson, J. W. Mason, Luigi Zingales, Thomas Piketty, Emmanuel Saez, Gabriel Zucman, Jeff Madrick, George Akerlof, Robert Shiller, John Coates, Karen Ho, Enisse Kharroubi, Claudia Goldin, Lawrence Katz, David Graeber, Charles Calomiris, Stephen H. Haber, Allan H.

…

See also Atif Mian and Amir Sufi, House of Debt: How They (and You) Caused the Great Recession and How We Can Prevent It from Happening Again (Chicago: University of Chicago Press, 2014). 19. Raghuram G. Rajan, Fault Lines: How Hidden Fractures Still Threaten the World Economy (Princeton, NJ: Princeton University Press, 2010), 21. 20. Carmen M. Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton, NJ: Princeton University Press, 2009). 21. McKinsey Global Institute, “Debt and (Not Much) Deleveraging,” February 2015, 98–99. 22. Greenwood and Scharfstein, “The Growth of Finance,” 21. 23. Financial efficiency is defined here as the amount of money and engagement that finance provides to Main Street, rather than to the capital markets themselves. 24.

Seven Crashes: The Economic Crises That Shaped Globalization
by Harold James
Published 15 Jan 2023

A powerful book by Atif Mian and Amir Sufilater argued exactly that case for the central problem of highly indebted American households: that the mortgages that had provoked the subprime crisis should be written down, and that the application of such discipline would deter future overlending and misbehavior on the part of lenders.17 A substantial number of analysts, notably Kenneth Rogoff and Carmen Reinhart, made a similar point about country debt; prominent officials at the IMF pushed the same case in May 2010 as the Greek financial crisis erupted onto the international stage, and called on the advice of the world’s foremost expert in debt write-off, Cleary Gottlieb’s Lee Buchheit. What prevented the adoption of such a measure was the fear that it would spark market contagion, that other categories of debt and other countries would be affected, and that a debt restructuring would bring down a precariously balanced house of cards.

…

The foreign holders of American debt would eventually “get tired.”30 A second interpretation holds that it was the academic framing of the policy debate that changed perception to focus on the dangers of government overspending: in particular, one influential book might have played a key role. In September 2009, Carmen Reinhart and Kenneth Rogoff published their ironically titled study This Time Is Different. On one level, the book was a stark warning about the extent of the damage done by complex financial crises, and consequently of the long time (seven years on historical average) that recovery would take. It was inevitable that readers would ask whether there were shortcuts that might bring quicker recovery.

…

Treasury Bloodbath Soaks Top Fund Managers,” Reuters, June 5, 2009. 28. Liz Capo McCormick, “Bond Vigilantes Confront Obama as Housing Falters (Update3),” Bloomberg, May 29, 2009. 29. “The Bond Vigilantes,” Wall Street Journal, May 28, 2009. 30. “Obama Says U.S. Can’t Keep Borrowing from China,” Reuters, May 14, 2009. 31. Carmen M. Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton: Princeton University Press, 2009). 32. George Osborne, “The Mais Lecture: A New Economic Model,” February 24, 2010, https://conservative-speeches.sayit.mysociety.org/speech/601526. 33. Kevin Brady, “Statement of Congressman Kevin Brady, Ranking Republican House Member,” Congressional Documents and Publications, April 3, 2009. 34.

The Enablers: How the West Supports Kleptocrats and Corruption - Endangering Our Democracy
by Frank Vogl
Published 14 Jul 2021

According to an analysis by Renaissance Capital, the outstanding sovereign Eurobond debt level of African nations exceeds $100 billion. 27. President Trump had a scheduled meeting with the president of Egypt at the G20 Summit in France in 2019 when he called out: “Where is my favorite dictator?” – Rolling Stone, September 14, 2019. 28. Kiel Institute for the World Economy report “China’s Overseas Lending” by Sebastian Horn, Carmen Reinhart, and Christoph Trebesch, June 2019. This is one of the most authoritative reports analyzing the ways in which China has made foreign loans and increased its influence in many countries as a result. An additional essay by these researchers was published on the same topic in June 2020. 29. Kiel Institute report, March 2021, titled “How China Lends: A Rare Look into 100 Debt Contracts with Foreign Governments.” 30.

…

Report. 2020. Group of Thirty. “Banking Conduct and Culture: A Call for Sustained and Comprehensive Reform.” 2015. Group of Thirty. “Banking Conduct and Culture: A Permanent Mindset Change.” 2018. Havel, Vaclav. Open Letters: Selected Writings 1965–1990. Vintage Books. 1992. Horn, Sebastian, Carmen Reinhart, and Christoph Trebesch. “China’s Overseas Lending.” Report from the Kiel Institute for the World Economy. 2019. International Consortium of Investigative Journalists (ICIJ). “Panama Papers.” Report. 2016. International Consortium of Investigative Journalists (ICIJ). “Paradise Papers.” Report. 2017.

The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
by Ruchir Sharma
Published 5 Jun 2016

* I focused only on large economies because the current account in smaller ones can swing sharply with one big investment from abroad, skewing the results. Large is defined as an economy representing at least 0.2 percent of global GDP, which in 2015 would be an economy of more than $150 billion. † I say “of some kind” because this definition includes banking, currency, inflation, or debt crises as defined by Carmen Reinhart and Kenneth Rogoff. Data on these kinds of crises is available for 34 of the 40 cases, and 31 of them, or 91 percent, suffered at least one of these crises. ‡ The revival of savings is demonstrated, in technical terms, by the global correlation between domestic savings and domestic investment, which fell from 0.8 in 1980 to −0.1 in 2007 and has since climbed back up to 0.7. 9 THE KISS OF DEBT Is debt growing faster or slower than the economy?

…

† By 2015, I should note, some private financial industry researchers were publishing pieces on the connection between credit binges and slower economic growth, including “Untangling China’s Credit Conundrum” from Goldman Sachs that January and “Keeping a Wary Eye on the EM Credit Cycle” by JP Morgan that November. ‡ In most of these cases, GDP growth was strong during the five-year period when credit was growing dangerously fast, so credit growth was the main reason the credit/GDP ratio was rising § Here I use financial crisis to mean a banking crisis as defined by Carmen Reinhart and Kenneth Rogoff in This Time Is Different (2009), which captures bank runs that force a government to close, merge, bail out, or take over one or more financial institutions. ¶ In twenty-six of the thirty cases, the average annual rate of growth fell over the next five years. The other four—Malaysia, Uruguay, Finland, and Norway—experienced a serious contraction in the economy, but the recovery came soon enough to lift the average rate of growth for the next five years

…

“Dark Matter: The Hidden Capital Flows That Drive G10 Exchange Rates.” Deutsche Bank Markets Research, March 6, 2015). Hyman, Ed. “Bond Yields Up But S&P Advances.” Evercore ISI, February 18, 2015. “Is That a Kleptocrat in Your Balance of Payments?” Financial Times Alphaville, March 10, 2015. Kaminsky, Graciela, Saul Lizondo, and Carmen Reinhart. “Leading Indicators of Currency Crises.” International Monetary Fund, 1998. Keohane, David. “China, When a Hot Money Outflow Threatens to Become a Torrent.” Financial Times Alphaville, May 13, 2015. Lowther, Ed. “A Short History of the Pound.” BBC News, February 14, 2014. “NRIs Sent Home $65 Billion in Past Six Months:Lord Swraj Paul.”

Blindside: How to Anticipate Forcing Events and Wild Cards in Global Politics
by Francis Fukuyama
Published 27 Aug 2007

In 1983–85, devaluation did not set the stage for a wave of bankruptcies, so before the crisis hit in 1997 this remained the expectation of most observers. In retrospect, the analysis that came closest to predicting the dynamics of the East Asian crisis was a March 1996 U.S. Federal Reserve report by Carmen Reinhart and Graciela Kaminsky on banking crises and balance-of-payment problems.5 The paper examined the history of financial crises in several countries, looking specifically at the link between banking problems and the exchange rate. After reviewing the experience of several countries, Reinhart and Kaminsky found a pattern in which countries deregulated their financial systems and experienced a surge of lending that produced credit-quality problems.

…

“Key Judgments from October 2002 National Intelligence Estimate,” Iraq’s Continuing Programs for Weapons of Mass Destruction, presented at background briefing by a senior administration official, released by the White House (July 18, 2003). Chapter Five 1. Paul Krugman, “The Myth of Asia’s Miracle,” Foreign Affairs (November/December, 1994). 2. Jim Walker, Credit Lyonnais Securities. 3. Simon Ogus and Danny Truell, “The Myth of Asian Growth” (London: SBC Warburg, June 1996). 4. UN report. 5. Graciela L. Kaminsky and Carmen M. Reinhart, “The Twin Crises: The Causes of Banking and Balance-of-Payments Problems,” International Finance Discussion Papers 544 (Washington: Federal Reserve System, March 1996). Chapter Six 1. Carlotta Perez, Technological Revolutions and Financial Capital (Cheltenham, U.K.: Edward Elgar, 2002). See also Robert D.

European Spring: Why Our Economies and Politics Are in a Mess - and How to Put Them Right
by Philippe Legrain
Published 22 Apr 2014

Along with Alesina’s claptrap, another flawed economic study that was influential with eurozone policymakers, notably European Commission fiscal enforcer Olli Rehn, purported to show that the economy grinds to a halt once public debt exceeds 90 per cent of GDP.202 Since government debt in the eurozone as a whole was nearing that apparent threshold in 2010 – and had exceeded it in several countries – this appeared to warrant immediate, front-loaded austerity.203 But the “findings” in the paper published in January 2010 by Harvard economists Carmen Reinhart and Kenneth Rogoff were always dubious – and they were later discredited.204 Reinhart and Rogoff found that high public debt was associated with slow growth but did not establish that the former caused the latter. While high debt may lead to slow growth, it is more plausible that slow growth leads to high debt, and that a third factor may determine both.

…

“Stability Programme for Spain, 2011–2014” http://ec.europa.eu/europe2020/pdf/nrp/sp_spain_en.pdf 200 http://www.cnbc.com/id/38987325/Austerity_Equals_Confidence_Trichet 201 http://www.ecb.int/pub/pdf/annrep/ar2010annualaccounts_en.pdf 202 For example, in a speech to the Council of Foreign Relations in Brussels on 1 June 2011, Olli Rehn said "Carmen Reinhart and Kenneth Rogoff have coined the ‘90 per cent rule’, that is, countries with public debt exceeding 90 per cent of annual economic output grow more slowly. High debt levels can crowd out economic activity and entrepreneurial dynamism, and thus hamper growth. This conclusion is particularly relevant at a time when debt levels in Europe are now approaching the 90% threshold, which the US has already passed." http://europa.eu/rapid/press-release_SPEECH-11-407_en.htm Even in February 2013, when the devastating consequences of austerity were apparent, Rehn wrote to EU finance ministers stating that "it is widely acknowledged, based on serious academic research, that when public debt levels rise above 90 per cent they tend to have a negative impact on economic dynamism, which translates into low growth for many years.

…

That is why consistent and carefully calibrated fiscal consolidation remains necessary in Europe.” http://ec.europa.eu/commission_2010-2014/rehn/documents/cab20130213_en.pdf 203 Eurostat, general government consolidated gross debt. Code: tsieb090. In the eurozone as a whole this was 85.4 per cent of GDP in 2010, 87.3 per cent in 2011 and 90.6 per cent in 2012. 204 Carmen Reinhart and Kenneth Rogoff, "Growth in a Time of Debt", NBER working paper 15639, January 2010 205 http://www.nextnewdeal.net/rortybomb/guest-post-reinhartrogoff-and-growth-time-debt 206 A point eloquently made by Adam Posen here: http://www.ft.com/cms/s/0/a6d94b02-a774-11e2-9fbe-00144feabdc0.html 207 Thomas Herndon, Michael Ash and Robert Pollin, "Does High Public Debt Consistently Stifle Economic Growth?

Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown
by Philip Mirowski
Published 24 Jun 2013

Yet the nightmare cast its shroud in the guise of a contagion of a deer-in-the-headlights paralysis: beyond their pretense of expertise, no one who fancied themselves opposed to neoliberal decadence really possessed solid convictions concerning where the intellectual failure behind the crisis should have been well and truly situated. They seemed united by nothing more than a vague disaffection from the status quo in economics. And worse, while the authorities dithered, the Ghoulish Creatures of the Right had gotten back up, dusted themselves off, and discovered renewed strength. Economists such as Ken Rogoff and Carmen Reinhart had the audacity to stand up at INET and treat the contemporary world crisis as just another ho-hum business cycle: nothing untoward or unprecedented had happened here. Thus doctrines concocted at the American Enterprise Institute and the Cato Institute began their slow seepage back into respectability.

…

In subscribing to this notion, the left unconsciously accepts the key notion of the populist right and the neoclassical orthodoxy, that “nothing is substantially different between then and now.” Markets are timeless entities with timeless laws, they insist. Indeed, this is the identical premise of some of the most popular crisis books of the last few years, from Kenneth Rogoff and Carmen Reinhart’s This Time Is Different to David Graeber’s Debt: The First 5,000 Years.24 Yet that is precisely where the polemical divergence should originate on the left. Things are profoundly different about the economy, the society, and in the global political arena than they were during the Cold War: some recent neoliberal innovations have lent the current crisis its special bitter tang; understanding precisely how and where they are different is a necessary first step in developing a blueprint for a better world.

…

Roberts, David. Victorian Origins of the British Welfare State (New Haven: Yale University Press, 1960). Robin, Corey. The Reactionary Mind (New York: Oxford University Press, 2011). Robison, Richard. The Neoliberal Revolution: Forging the Market State (London: Palgrave, 2006). Rogoff, Kenneth, and Carmen Reinhart. This Time Is Different (Princeton: Princeton University Press, 2009). Roncaglia, Alessandro. Why Economists Got It Wrong: The Crisis and Its Cultural Roots (London: Anthem, 2010). Rose, Nikolas. Inventing Our Selves: Psychology, Power and Personhood (Cambridge, U.K.: Cambridge University Press, 1996).

The Health Gap: The Challenge of an Unequal World
by Michael Marmot
Published 9 Sep 2015

As so often, what should be an informed debate about evidence is a none-too-veiled contest about prior political beliefs, or short-term low-level politics. It is difficult for a non-economist to penetrate the argument and form an independent judgement. It can be noted that the intellectual case for austerity has suffered a couple of recent blows. Austerians have cited, among others, the Harvard economists Carmen Reinhart and Kenneth Rogoff, who set out to show that when national debt climbs above 90 per cent of GDP, economic growth slows.30 They showed it, except that a graduate student checking their figures found elementary errors that cast considerable doubt on their conclusions.31 Second, the IMF, which arguably has wreaked great havoc globally with its universal prescription to cut government spending, has published new estimates that austerity has a bigger effect on slowing economic growth than it used to think.32 In Britain, the Office of Budget Responsibility says that it subscribes to the widely held assumption that fiscal contraction damages growth.

…

It had gone from being a well-organised society based on fishing and huge supplies of geothermal energy – hence aluminium smelting – to housing three private banks that represented everyone’s worst nightmare of what reckless cowboys can do when let loose on the global economy. In Chapter 6, I referred to the debate around the work of Harvard economists Carmen Reinhart and Kenneth Rogoff who showed that when national debt climbs above 90 per cent of GDP, economic growth slows.2,3 At its peak, Iceland’s debt was 850 per cent of GDP! Icelandic banks bought assets round the world, as though all curves go ever upwards without a day of reckoning. The butterfly that flapped its wings might have been the collapse of sub-prime mortgages in the USA, but it caused a hurricane in Iceland and, predictably, the castles in the air were reduced to rubble.

Arguing With Zombies: Economics, Politics, and the Fight for a Better Future
by Paul Krugman
Published 28 Jan 2020

In this case, one paper, by the economists Alberto Alesina and Silvia Ardagna, claimed to find evidence that cutting government spending inspired so much private-sector confidence that overall spending would actually rise. In “Myths of Austerity,” I mocked this as belief in the “confidence fairy.” Indeed, a closer look at the evidence, and then the experience of austerity in practice, showed that the doctrine of “expansionary austerity” was all wrong. But key policymakers seized on the doctrine. Meanwhile, Carmen Reinhart and Ken Rogoff—who had done fine work in the past—came out with a paper that was, well, sloppy, asserting that terrible things happen to economies when debt crosses a magic threshold of 90 percent of G.D.P. This work also fell apart on examination, but only after it had served as an excuse for destructive policies in much of Europe.

…

NASA’s Mars Orbiter crashed because engineers forgot to convert to metric measurements; JPMorgan Chase’s “London Whale” venture went bad in part because modelers divided by a sum instead of an average. So, did an Excel coding error destroy the economies of the Western world? The story so far: at the beginning of 2010, two Harvard economists, Carmen Reinhart and Kenneth Rogoff, circulated a paper, “Growth in a Time of Debt,” that purported to identify a critical “threshold,” a tipping point, for government indebtedness. Once debt exceeds 90 percent of gross domestic product, they claimed, economic growth drops off sharply. Ms. Reinhart and Mr. Rogoff had credibility thanks to a widely admired earlier book on the history of financial crises, and their timing was impeccable.

War and Gold: A Five-Hundred-Year History of Empires, Adventures, and Debt
by Kwasi Kwarteng
Published 12 May 2014

Such eighteenth-century luminaries as Edmund Burke, Thomas Jefferson and David Hume were all fervent in their denunciations of paper money. Today government debt and deficits are arguably the greatest challenge facing the developed economies of the world. In a widely cited book, This Time is Different: Eight Centuries of Financial Folly, Carmen Reinhart and Kenneth Rogoff analysed the nature of government indebtedness over 800 years of ‘financial folly’. Debt crises have been punctuating world history for centuries, as governments continued to spend beyond their resources. This is the theme of Reinhart and Rogoff’s work.6 My book implicitly argues a rather different case.

…

As George Papandreou swept into power after the elections of 4 October 2009, he promised a new beginning. Behind the optimism and the vague and cloudy phrases lay the reality of 200 years of Greek financial history. ‘From 1800 to well after World War II, Greece found itself virtually in continual default,’ noted Carmen Reinhart and Kenneth Rogoff in their important history of financial crises, This Time is Different.40 Such a history would perhaps have disqualified Greece automatically from ever being considered as a full participant in the euro. But it became such a participant, because political considerations were paramount in the promotion of the European single currency; economics played only a minor part.

The End of Growth: Adapting to Our New Economic Reality
by Richard Heinberg
Published 1 Jun 2011

Moreover, much of this apparent growth has come about because of enormous injections of stimulus and bailout money from the Federal government. Subtract those, and the GDP growth of the past year or so almost disappears. On the basis of historical analysis of previous financial crises, economists Carmen Reinhart and Kenneth Rogoff conclude that the economic crisis of 2008 will have “. . .deep and lasting effects on asset prices, output and employment. Unemployment rises and housing price declines extend out for five and six years, respectively. On the encouraging side, output declines last only two years on average.

…

See Stephen Broadberry et al., “British Economic Growth, 1270–1870,” University of Warwick, UK, published online December 6, 2010. 7. “GDP United States (Recent History),” Data360.org, data360.org/dsg.aspx?Data_Set_Group_Id=353&page=3&count=100. 8. “‘Great Recession’ Over, Research Group Says,” msnbc.msn.com, posted September 20, 2010. 9. Carmen M. Reinhart and Kenneth S. Rogoff, “The Aftermath of Financial Crises,” (presented at the meeting of the American Economic Association, San Francisco, CA, January 3, 2009). 10. In philosophy this is called the problem of induction. One cannot infer that a series of events will happen in the future just as they have in past.

…

The Atlantic, 9/21/2010theatlantic.com/business/archive/2010/09/why-we-dont-need-to-pay-down-the-national-debt/63273. 17. For a perspective on why US government debt may not face limits anytime soon, as long as the economy returns to growth, see James K. Galbraith, “Casting Light on ‘The Moment of Truth,’” The Huffington Post, posted December 3, 2010. 18. Carmen M. Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly (New Jersey: Princeton University Press, 2009). 19. See Paul Krugman, “The burden of debt,” New Y Times. 4/28/2009. krugman.blogs. nytimes.com/2009/08/28/the-burden-of-debt/; Daniel Berger, “The Deficit: Size Doesn’t Matter” (2009).

Destined for War: America, China, and Thucydides's Trap
by Graham Allison
Published 29 May 2017

Some observers claim the twenty-first century is so different from the past that lessons from previous experience are no longer relevant. To be sure, it is difficult to find precedents for current levels of economic integration, globalization, and ubiquitous worldwide communication, or global threats from climate disruption to violent Islamic extremism. But as my colleagues Carmen Reinhart and Kenneth Rogoff remind us in their analysis of 350 financial crises over the past eight centuries, many previous generations have imagined that This Time Is Different. 56 Reinhart and Rogoff side with Thucydides in reasoning that, as long as men are men, we can anticipate recurring patterns in human affairs.

…

For a definitive account of Soviet and American interventions in the Third World during this era, see Odd Arne Westad, The Global Cold War: Third World Interventions and the Making of Our Times (Cambridge: Cambridge University Press, 2005). For an illuminating narrative history of American covert operations in the Cold War that were aimed at foreign regime change, see Stephen Kinzer, Overthrow: America’s Century of Regime Change from Hawaii to Iraq (New York: Times Books, 2006), 111–216. [back] 56. Carmen Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton, NJ: Princeton University Press, 2009). [back] 57. See Howard Weinroth, “Norman Angell and The Great Illusion: An Episode in Pre-1914 Pacifism,” Historical Journal 17, no. 3 (September 1974), 551–74. [back] 58.

Science Fictions: How Fraud, Bias, Negligence, and Hype Undermine the Search for Truth
by Stuart Ritchie
Published 20 Jul 2020

Just as physicists would love to discover a new law (or a way to break the ones we already know), and just as mathematicians work endlessly to prove their theorems, many social scientists, particularly economists, long to discover a stylised fact that can be associated with their name – and that the people who make important decisions can easily keep in mind. When they published a major paper in 2010, the economists Carmen Reinhart and Kenneth Rogoff thought they’d hit the stylised-fact jackpot. For two years, politicians had been frantically trying to address the fallout of the 2008 financial crisis and the ensuing Great Recession. Amid all the conflicting advice, Reinhart and Rogoff’s paper, entitled ‘Growth in a Time of Debt’, was a godsend, providing strong evidence to recommend one particular course of economic action: austerity.2 Reinhart and Rogoff had studied the debt-to-GDP ratio – the relationship between what a country owes to its creditors (its public debt, which, perhaps confusingly, is also known as its government debt or its sovereign debt) and what new goods and services it can produce (its Gross Domestic Product).

…

Daniel Hirschman, ‘Stylized Facts in the Social Sciences’, Sociological Science 3 (2016): pp. 604–26; https://doi.org/10.15195/v3.a26 2.  The study was an online ‘working paper’ for a while (as is normal in economics, as we’ll see in the final chapter), but it was eventually officially published as Carmen M. Reinhart and Kenneth S. Rogoff, ‘Growth in a Time of Debt’, American Economic Review 100, no. 2 (May 2010): pp. 573–78; https://doi.org/10.1257/aer.100.2.573 3.  Osborne: George Osborne, ‘Mais Lecture – A New Economic Model’, 24 Feb. 2010; https://conservative-speeches.sayit.mysociety.org/speech/601526; Republican members: United States Senate Committee on the Budget, ‘Sessions, Ryan Issue Joint Statement On Jobs Report, Call For Senate Action On Budget’, 8 July 2011; https://www.budget.senate.gov/chairman/newsroom/press/sessions-ryan-issue-joint-statement-on-jobs-report-call-for-senate-action-on-budget 4.  

…

Thomas Herndon et al., ‘Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff’, Cambridge Journal of Economics 38, no. 2 (April 2013): pp. 257–79; https://doi.org/10.1093/cje/bet075 6.  Reinhart and Rogoff admitted the Excel error, though they didn’t agree with the critics on many of their other points: Carmen M. Reinhart & Kenneth S. Rogoff, ‘Reinhart-Rogoff Response to Critique’, Wall Street Journal, 16 April 2013; https://blogs.wsj.com/economics/2013/04/16/reinhart-rogoff-response-to- critique/ 7.  Herndon et al., ‘High Public Debt’, p. 14. 8.  Betsey Stevenson & Justin Wolfers, ‘Refereeing Reinhart-Rogoff Debate’, Bloomberg Opinion, 28 April 2013; https://www.bloomberg.com/opinion/articles/2013-04-28/refereeing-the-reinhart-rogoff-debate 9.  

Red Flags: Why Xi's China Is in Jeopardy
by George Magnus
Published 10 Sep 2018

However, the almost fourfold rise in the old-age dependency ratio will subject China to a substantial fiscal burden. The development of coping mechanisms can help to mitigate the burden, but China will also have to make difficult decisions affecting taxation and spending to keep public debt on an even keel. In their seminal work in the wake of the financial crisis, Carmen Reinhart and Kenneth Rogoff asserted that economic growth slows sharply, or even falls, once the ratio of public debt to GDP breaches 90 per cent.17 While the mechanical implication here has been disputed, and may in any case be uncertain in a state-driven economy, economists are right to say that the debt to GDP ratio cannot increase continuously without important economic implications, even if precise thresholds of risk are hard to define.

…

‘China Plans Immigration Agency to Lure Overseas Talent’, Bloomberg, 18 July 2016, <https://www.bloomberg.com/news/articles/2016-07-18/china-said-to-create-new-office-to-lure-overseas-work-talent>. 16. ‘China 2030’, World Bank and Development Research Center of the State Council, 2013. 17. Carmen M. Reinhart and Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly, Princeton University Press, 2009. 18. IMF, ‘Older and Smaller’, Finance and Development, vol. 53, no. 1, March 2016. 19. IMF, Fiscal Monitor, October 2016. 20. Hu Jiye, China University of Political Science and Law, cited in Wynne Wang, ‘The Silver Age: China’s Aging Population’, Cheung Kong Graduate School of Business (CKGSB) Knowledge, 17 October 2016. 21.

EuroTragedy: A Drama in Nine Acts
by Ashoka Mody
Published 7 May 2018

It was not too early, Gourinchas advised, for the Greek and Portuguese governments to tighten their fiscal belts and start saving up for the day when the bills would surely come due. Another Princeton economist, Christopher Sims, spoke next, and he had the same message: “Opening up capital markets in poor countries has often led initially to large inflows and later to financial problems.”137 Sims also warned of the risk of sovereign defaults. In August 2003, economists Carmen Reinhart and Kenneth Rogoff noted that Greece and Portugal belonged to the small club of “serial defaulters.”138 Both had defaulted on external creditors multiple times in the nineteenth century. Rogoff was still the IMF’s chief economist and Reinhart was one of his deputies. Together with their colleague, Miguel Savastano, they reported that serial defaulters had “weak fiscal structures and weak financial systems,” which persisted for years.

…

He acknowledged that the financial tumult since the Lehman bankruptcy announcement was unnerving and was likely to continue. But Rogoff insisted that the financial sector had been coddled too long and, as a consequence, had become “badly bloated.” Lehman’s failure, he said, was necessary to return to a leaner and more effective financial system. Rogoff was basing his comments on research with Carmen Reinhart, his colleague while at the IMF and now an economics professor at the University of Maryland. They had recently established through careful historical analysis that financial debt crises are followed by prolonged economic distress.93 Hence, the crucial policy task was to prevent debt from building up in the first place.

…

However, the victorious allies after World War II did not risk making the same mistake: under the London Debt Agreement in 1953, they wrote off about half of German prewar and postwar debt. That debt write-​off created the fiscal space for the German government to increase expenditures on public health, education, and housing, and by lowering default risk, the write-​off reduced the interest rates the government had to pay on its debt to private creditors.93 Economists Carmen Reinhart and Christoph Trebesch have documented that such benefits of debt forgiveness have applied in a large number of cases. They report that in the 1920s, the United States and the United Kingdom wrote off substantial portions of debt owed to them by several European countries, providing much-​needed growth impetus to the countries receiving relief.94 Tsipras and Syriza had influential supporters, such as Columbia University economist Jeffrey Sachs and US President Barack Obama.

The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse
by Mohamed A. El-Erian
Published 26 Jan 2016

They avoided talking about debt reduction despite the fact that their emergency liquidity support to highly indebted countries was associated with growth rates that consistently undershot their own expectations and projections. And they underestimated the societal and political implications of a prolonged period of economic underperformance and financial insecurity. The harmful consequences have been material. As Carmen Reinhart and Kenneth Rogoff have noted, because the advanced economies have not been able to also use other options, such as debt restructuring and conversions, which were used in the 1930s, they have been undermined by a “forgotten lesson.”6 It is high time to change this. 4. GETTING THE ARCHITECTURE RIGHT (OR, AT LEAST, LESS WRONG) A.

…

“The Fund’s Lending Framework and Sovereign Debt,” International Monetary Fund, Washington, D.C., June 2014, http://www.imf.org/external/np/pp/eng/2014/052214a.pdf. 5. See, for example, “Debt Relief Under the Heavily Indebted Poor Countries (HIPC) Initiative,” IMF Factsheet, Washington, D.C., September 2014, https://www.imf.org/external/np/exr/facts/hipc.htm. 6. Carmen M. Reinhart and Kenneth S. Rogoff, “Financial and Sovereign Debt Crises: Some Lessons Learned and Those Forgotten,” IMF Working Paper, WP/13/266, December 2013, https://www.imf.org/external/pubs/ft/wp/2013/wp13266.pdf. 7. “Bleak Words and Difficult Homework from the IMF,” Financial Times, October 5, 2014, http://www.ft.com/intl/cms/s/0/53516aec-4af6-11e4-b1be-00144feab7de.html. 8.

Who Needs the Fed?: What Taylor Swift, Uber, and Robots Tell Us About Money, Credit, and Why We Should Abolish America's Central Bank
by John Tamny
Published 30 Apr 2016

It did not matter what the Federal Reserve said.1 In 1933, FDR made the decision to devalue the dollar from 1/20th of an ounce of gold to 1/35th of an ounce.2 Forgetting the lesson of the early 1920s, when the integrity of the dollar was maintained, Roosevelt devalued the dollar and thereby marked the first time the United States defaulted on its debt. As Carmen Reinhart and Kenneth Rogoff describe in This Time Is Different (2009), “The abrogation of the gold clause in the United States in 1933, which meant that public debts would be repaid in fiat currency rather than gold, constitutes a restricting of nearly all the government’s domestic debt.”3 With the United States heavily in debt thanks to spending that was logically failing to stimulate the economy, FDR reduced the value of the dollars being returned to holders of U.S. debt.

…

John Balassi and Josie Cox, “Apple Wows Market with Record $17 Billion Bond Deal,” Reuters, April 30, 2013. 4. Smith, Dead Bank Walking, 163. 5. Ibid. CHAPTER TWENTY 1. Amity Shlaes, The Forgotten Man: A New History of the Great Depression (New York: HarperCollins, 2007), 147. My emphasis. 2. Lewis, Gold: The Once and Future Money. 3. Carmen M. Reinhart and Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton, N.J.: Princeton University Press, 2009). 4. Thiel, Zero to One, 44. 5. Shlaes, Forgotten Man, 148. 6. Eric Rauchway, The Money Makers: How Roosevelt and Keynes Ended the Depression, Defeated Facism, and Secured a Prosperous Peace (New York: Basic Books, 2015). 7.

End This Depression Now!
by Paul Krugman
Published 30 Apr 2012

The Road Not Taken Historically, financial crises have typically been followed by prolonged economic slumps, and U.S. experience since 2007 has been no different. Indeed, U.S. numbers on unemployment and growth have been remarkably close to the historical average for countries experiencing these kinds of problems. Just as the crisis was gathering momentum, Carmen Reinhart, of the Peterson Institute of International Economics, and Kenneth Rogoff, of Harvard, published a history of financial crises with the ironic title This Time Is Different (because in reality it never is). Their research led readers to expect a protracted period of high unemployment, and as the story unfolded, Rogoff would note that America was experiencing a “garden-variety severe financial crisis.”

Everydata: The Misinformation Hidden in the Little Data You Consume Every Day
by John H. Johnson
Published 27 Apr 2016

Food and Drug Administration (FDA) allows foods with less than half a gram of fat per serving to still be called “fat-free.” So, if you eat more than one serving of a few “fat-free” foods per day, you could easily be consuming a few grams of fat.27 Tough cell—It was, as Bloomberg Business called it, “the Excel Error that Changed History.”28 Two Harvard University economists—Carmen Reinhart and Kenneth Rogoff—ended up in the headlines for all the wrong reasons when they made a spreadsheet mistake in a paper that examined the effects of government debt on economic growth. They forgot to include five rows in one of their calculations, which made a key result turn out to be -0.1 percent instead of +0.2 percent.

The Limits of the Market: The Pendulum Between Government and Market
by Paul de Grauwe and Anna Asbury
Published 12 Mar 2017

This euphoria has a blinding effect, and few people notice the risks. Real estate prices and share prices continue to rise. The markets exercise no disciplining influence whatsoever on people’s behaviour. On the contrary, they lead the way to increased euphoria and an ever greater lack of discipline. As Carmen Reinhart and Kenneth Rogoff emphasize in their book This Time is Different,8 in periods of euphoria people tell tales which suggest that the price rises in shares or real estate are the result of fundamental developments. They believe that these high prices are the consequence of new technological developments and are completely justified.

Utopia or Bust: A Guide to the Present Crisis
by Benjamin Kunkel
Published 11 Mar 2014

The first decades after World War II, before the US abandoned the gold standard, saw an inflationary erosion of the value of money; over the past generation, by contrast, the major currencies of the capitalist core, lacking any metallic basis, have nevertheless stubbornly resisted rapid inflation. In other words, the years of gold’s long goodbye were less, not more, propitious for creditors than the virtual money era that followed. As Carmen Reinhart established in a paper cited by Coggan, the real rate of interest (taking inflation into account) was, from 1945 to 1980, as often negative as positive across developed economies; in any given year, a lender was as likely to be losing as gaining real wealth. If this didn’t quite bring about Keynes’s “euthanasia of the rentier,” it did amount to the pacification of the rentier, even as profit rates reached historic heights: the main way for capitalists to beat inflation was by investing money, not by lending it.

Smart Money: How High-Stakes Financial Innovation Is Reshaping Our WorldÑFor the Better
by Andrew Palmer
Published 13 Apr 2015

From Breakthrough to Meltdown The previous chapter described how breakthroughs in finance have helped to propel enterprise and realize ambitions throughout human history. But anyone who seeks to defend the industry must also recognize how often, and how badly, it goes wrong. In This Time Is Different, their excellent survey of debt crises across the centuries, Carmen Reinhart and Kenneth Rogoff analyze episodes of banking crises. Such meltdowns are depressingly common in both developed and emerging economies: Britain, America, and France have experienced twelve, thirteen, and fifteen episodes of banking crisis, respectively, since 1800, for example.1 The first bailout in the United States happened way back in 1792, when a bubble and then a slump in the price of the country’s federal debt helped spark widespread panic.

Cogs and Monsters: What Economics Is, and What It Should Be
by Diane Coyle
Published 11 Oct 2021

Yet, all too often economists allow lay people and policy makers to believe that our policy suggestions have far more scientific foundation than a neutral objective observer would give them. Yet macroeconomists typically draw on a limited range of highly aggregated, correlated, and auto-correlated data, now readily available online, without reflecting enough on how the data have been constructed, to make sometimes strong claims. Indeed, Carmen Reinhart and Ken Rogoff (2009) were unusual in collecting a significant new data set, a historical database on government debt, whatever your views about their interpretation of the data.1 Too few economists take the time to understand in detail how macroeconomic statistics are collected and adjusted, or to consider the conceptual issues, for example, in defining the production boundary delineating what we count as being in ‘the economy’, or making quality adjustments in measuring how much prices of goods such as consumer electronics have changed.

After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead
by Alan S. Blinder
Published 24 Jan 2013

Instead, the euro kept Greece expensive, and antiausterity riots scared tourists away. The third critical difference between the United States and Europe is perhaps too obvious to state: They had to deal with Greece; we didn’t. The Greek situation is, if you’ll pardon the Latin, sui generis. Greece has a dismal fiscal history. Economists Carmen Reinhart and Kenneth Rogoff found that Greece has been in default on its public debt roughly 50 percent of the time since gaining independence in the 1830s! More recently, Greece’s budget deficits were large before the crisis and huge thereafter. The Greeks also turn out to be pretty poor tax collectors—some would say they hardly try.

…

See Financial reform reorganization needs, 275–76, 296, 302 writing, process of, 315–16 Regulatory failure, 56–68 and AIG, 131–32 and Bush (G.W.), 58 causes of, 58–59 and credit default swaps (CDS), 65–68, 131–32 and credit-rating agencies, 80–81 and derivatives, 60–64 and efficient markets hypothesis, 64–65 Federal Deposit Insurance Corporation (FDIC), 58 and Glass-Steagall repeal, 266–67 Office of the Comptroller of the Currency (OTS), 57–58 and political pressure, 59 and shadow banking system, 59–64 and structured investment vehicles (SIVs), 57 and subprime mortgages, 58–59 Reid, Harry, 183–84, 226 Reinhart, Carmen, 413 Reinhart, Vincent, 110, 113 Republicans anticonsumer protection, 312 anti-Dodd-Frank Act, 306, 317–18 anti-Keynesian, 211, 235–36, 350–51 antistimulus, 225–28, 234, 351, 393–94 anti-TARP, 192–93 backlash by, areas of, 346–53 blood sport, engaging in, 439, 441 congressional gains (2010), 347–48 Obama bipartisan goals with, 220, 227 populist movement.

Investment: A History
by Norton Reamer and Jesse Downing
Published 19 Feb 2016

Given the still novel nature of many of the monetary responses and the almost accidental nature of some, but not all, of the fiscal support, it is unfortunate that a significant number of Americans seem to have drawn incorrect interpretations of the efficacy of what was done as well as the intended purpose. Not surprisingly, in view of the research published by Carmen Reinhart and Kenneth Rogoff, the recovery has been slow and not extraordinarily dynamic. Through an exhaustive historical compilation of past economic crises, Reinhart and Rogoff seem to have established that a serious recession accompanied by a financial crisis normally results in a slow, drawn-out recovery.50 In fact, that is what the United States appears to have experienced since 2009.

…

Stewart, “Volcker Rule, Once Simple, Now Boggles,” New York Times, October 21, 2011, http://www.nytimes.com/2011/10/22 /business/volcker-rule-grows-from-simple-to-complex.html. Ibid.; Dan Kedmey, “2 Years and 900 Pages Later, the Volcker Rule Gets the Green Light,” TIME.com, December 11, 2013, http://business.time .com/2013/12/11/2-years-and-900-pages-later-the-volcker-rule-gets -the-green-light. Carmen M. Reinhart and Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton, NJ: Princeton University Press, 2011), xliv–xlv and 238–239. 7. THE EMERGENCE OF INVESTMENT THEORY 1. Jean-Michel Courtault et al., “Louis Bachelier on the Centenary of Théorie de la Spéculation,” Mathematical Finance 10, no. 3 (July 2000): 342–343. 370 7.

Straight Talk on Trade: Ideas for a Sane World Economy
by Dani Rodrik
Published 8 Oct 2017

Economics Hijacked When the stakes are high, it is no surprise that battling political opponents use whatever support they can garner from economists and other researchers. That is what happened when conservative American politicians and European Union officials latched on to the work of two Harvard professors—Carmen Reinhart and Kenneth Rogoff—to justify their support of fiscal austerity.9 Reinhart and Rogoff had published a paper that appeared to show that public-debt levels above 90 percent of GDP do significant damage to economic growth. The paper was criticized by three economists from the University of Massachusetts at Amherst, who argued their findings were brittle.10 They had found a relatively minor spreadsheet error.

…

New York Times, Opinion Pages, January 26, 2016, https://www.nytimes.com/2016/01/26/opinion/whats-our-duty-to-the-people-globalization-leaves-behind.html?_r=2. 8. Fabrice Defever and Alejandro Riaño, “China’s Pure Exporter Subsidies,” Centre for Economic Performance Discussion Paper No. 1182, London School of Economics and Political Science, December 2012. 9. The original paper is Carmen M. Reinhart and Kenneth S. Rogoff, “Growth in the Time of Debt,” NBER Working Paper No. 15639, January 2010. 10. Thomas Herndon, Michael Ash, and Robert Pollin, “Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff,” Cambridge Journal of Economics, vol. 38(2), 2014: 257–279. 11.

The End of Wall Street
by Roger Lowenstein
Published 15 Jan 2010

Bernanke argued that their dollars had to flow somewhere, and the United States was merely an attractive destination. The curious financing of rich nations by poor ones reversed a long tradition. During previous eras, the U.S. had loaned money to developing nations, and had often come to rue the day. This time, as two professors, Carmen Reinhart of the University of Maryland and Kenneth Rogoff of Harvard, put it, “a large chunk of money had been recycled to a developing economy that exists within the United States’ own borders [emphasis added].”8 Surplus credit was flowing not to weak borrowers overseas, but to a Subprime Nation inside the United States.

…

ACCT=104&STORY=/www/story/02-04-2003/0001885208&EDATE=. 3 David Andrukonis, e-mail, September 7, 2004. 4 Mortgage Bankers Association. 5 Meredith Whitney, Oppenheimer equity research report, December 11, 2008. Household growth was 2.5 percent. 6 Martin Wolf, “Asia’s Revenge,” Financial Times, October 9, 2008, and also Martin Wolf, “Seeds of Its Own Destruction,” Financial Times, March 9, 2009. 7 Ben S. Bernanke, Sandridge Lecture, Virginia Association of Economics, Richmond, March 10, 2005. 8 Carmen M. Reinhart and Kenneth S. Rogoff, draft of “Is the 2007 U.S. Sub-Prime Financial Crisis So Different? An International Historical Comparison,” February 5, 2008; subsequently published in American Economic Review, May 2009. 9 Fannie Mae found 932 articles in a Google search of “housing bubble” in the first four months of 2005, and 1,248 such articles in just the next two months—a sharp acceleration.

23 Things They Don't Tell You About Capitalism
by Ha-Joon Chang
Published 1 Jan 2010

One sense in which the world has become more unstable during the last three decades of free-market dominance and strong anti-inflationary policies is the increased frequency and extent of financial crises. According to a study by Kenneth Rogoff, a former chief economist of the IMF and now a professor at Harvard University, and Carmen Reinhart, a professor at the University of Maryland, virtually no country was in banking crisis between the end of the Second World War and the mid 1970s, when the world was much more unstable than today, when measured by inflation. Between the mid 1970s and the late 1980s, when inflation accelerated in many countries, the proportion of countries with banking crises rose to 5–10 per cent, weighted by their share of world income, seemingly confirming the inflation-centric view of the world.

Firefighting
by Ben S. Bernanke , Timothy F. Geithner and Henry M. Paulson, Jr.
Published 16 Apr 2019

Paulson, Jr., with Nellie Liang, eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale University Press, forthcoming). U.S. strategy was able to limit the damage: Data for 63 financial crises in advanced economies, 1857 to 2013, were taken from Carmen Reinhart and Kenneth Rogoff, “Recovery from Financial Crises: Evidence from 100 Episodes,” American Economic Review: Papers & Proceedings 104(5) (2014): 50–55, https://scholar.harvard.edu/files/rogoff/files/aer_104-5_50-55.pdf. Based on Nellie Liang, Margaret M. McConnell, and Phillip Swagel, “Evidence on Outcomes,” in Ben S.

Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis
by Anatole Kaletsky
Published 22 Jun 2010

The question that needs to be asked about the Japanese experience is whether government support for struggling banks and overindebted borrowers caused the twenty years of stagnation or whether twenty years of economic stagnation prevented a recovery for weak borrowers and banks. A similar question must be asked about a fascinating and much-quoted historic study, coauthored by Carmen Reinhart and Kenneth Rogoff, the IMF’s former chief economist, which looked at the macroeconomic effect of financial crises in dozens of countries over the past six hundred years. This study concluded that recessions accompanied by banking crises are generally much longer and deeper than recessions in which banks avoid serious losses.12 The question is whether this historic evidence proves that banking crises cause particularly severe recessions or that particularly severe recessions cause banking crises, which then make these recessions even worse.

…

Organisation for Economic Co-operation and Development (OECD), OECD Outlook 86 (November 2009). 4 There has been a long history of debt defaults by sovereign governments, and in every case creditors have been left with no legal or political redress. See Anatole Kaletsky, The Costs of Default, and Carmen M. Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly. 5 The figures for Treasury securities exclude the notional holdings owned by the federal government itself through the Social Security Trust Fund and other purely notional accounting entities. Federal Reserve Board, “Flow of Funds Accounts of the United States: Flows and Outstandings, Third Quarter 2009,” December 10, 2009. 6 Strictly speaking, the current account deficit is slightly different from the trade deficit, as explained in the text. 7 The current account deficit for the first three quarters of 2009, annualized, was $407 billion. 8 To be precise, real incomes sixty years from now will be 3.2 times higher if U.S. growth averages 1.96 percent per head, as it has since 1950, and 1.8 times higher if growth slows to 1 percent per head. 9 This assumes real economic growth of 3 percent real and 2 percent inflation. 10 International Monetary Fund, “Fiscal Implications of the Global Economic and Financial Crisis,” IMF Staff Position Note SPN/09/13, June 2009. 11 Japan suffered five recessions in the twenty years since 1990, while the United States had three recessions and Britain and the eurozone suffered two each. 12 Reinhart and Rogoff, This Time Is Different. 13 Kaletsky, The Costs of Default. 14 See “Continental Illinois and ‘Too Big to Fail,’” in FDIC Division of Research and Statistics, History of the Eighties—Lessons for the Future, vol. 1, 235-257.

The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor
by William Easterly
Published 4 Mar 2014

When financial markets and institutions mobilize savings from disparate households to invest in these promising projects, this represents a second crucial step in fostering growth.33 There may indeed be more scope in finance than in goods markets for activities that generate private returns that are not social returns, such as deception, embezzlement, and outright Ponzi schemes. As explained by the great book satirically titled This Time Is Different, by Carmen Reinhart and Kenneth Rogoff, cheating in finance did not start with the horrific financial crisis of 2007 to 2008; it has been happening for centuries.34 Yet somehow, despite the cheating, finance keeps providing the essential services without which large-scale success would not be possible. ADAM SMITH AND DEVELOPMENT In 1986, just as Hyundai was cracking the US market, the Journal of Political Economy, one of the most prestigious journals in economics, published an article titled “Increasing Returns and Long-Run Growth.”

…

eds. Douglas Evanoff, Cornelia Holthausen, George Kaufman, and Manfred Kremer (Singapore: World Scientific Publishing Company, 2013), 2011 working paper available at http://faculty.haas.berkeley.edu/ross_levine/Papers/2011_ChicagoFed_DefenseofWallStreet.pdf, accessed September 12, 2013. 34. Carmen M. Reinhart and Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton, NJ: Princeton University Press, 2009). CHAPTER 12: TECHNOLOGY: HOW TO SUCCEED WITHOUT KNOWING HOW 1. Broadband Commission, The State of Broadband 2012: Achieving Digital Inclusion for All (Geneva, Switzerland: International Telecommunication Union, 2012), 5, 35, 43.

Inflated: How Money and Debt Built the American Dream
by R. Christopher Whalen
Published 7 Dec 2010

“Instead, every such loan has been subjected to major currency devaluation, rolled over, suspended, rescheduled, or otherwise restructured, repudiated, reduced, cancelled, or forgiven. The more drastic steps, leading to eventual, partial or complete cancelation of debt have been surprisingly frequent.”39 The views of researchers such as Walker Todd and Gerry O’Driscoll on foreign lending are confirmed in the more recent work of Carmen Reinhart and Kenneth Rogoff, This Time it is Different: Eight Centuries of Financial Folly. The book is another monumental research effort in the fine tradition of Freidman and Schwartz’s Monetary History of the United States and Allan Meltzer’s updates of that work, albeit focused on the foreign debt component of the economic story.

Profiting Without Producing: How Finance Exploits Us All
by Costas Lapavitsas
Published 14 Aug 2013

Brynjolfsson, Erik, Lorin Hitt, and Shinkyu Yang, ‘Intangible Assets: Computers and Organizational Capital’, Brookings Papers on Economic Activity: Macroeconomics, vol. 1, 2002, pp. 137–99. Buiter, Willem, and Anne Sibert, ‘The Central Bank as the Market-Maker of Last Resort: From Lender of Last Resort to Market-Maker of Last Resort’, in The First Global Financial Crisis of the 21st Century, ed. Andrew Felton and Carmen Reinhart, London: Center for Economic Policy Research (CERP), 2007; available at VoxEU.org. Buiter, Willem, ‘New Developments in Monetary Economics: Two Ghosts, Two Eccentricities, a Fallacy, a Mirage and a Mythos’, Economic Journal, 115, 2005, pp. C1–C31. Buiter, William, ‘The “Good Bank” Solution’, Financial Times (online), 29 January 2009.

…

De Grauwe, Paul, ‘The Governance of a Fragile Eurozone’, CEPS Working Document No. 346, Centre for European Policy Studies, May 2011. De Grauwe, Paul, ‘There is More to Central Banking Than Inflation Targeting’, in The First Global Financial Crisis of the 21st Century, ed. Andrew Felton and Carmen Reinhart, VoxEU–Center for Economic Policy Research, 2007. De Grauwe, Paul, and Wim Moesen, ‘Gains for All: A Proposal for a Common Euro Bond’, Intereconomics 44:3, 2009, pp. 132–5. De Grauwe, Paul, and Yuemei Ji, ‘Mispricing of Sovereign Risk and Multiple Equilibria in the Eurozone’, CEPS Working Document No. 361, Centre for European Policy Studies, January 2012.

The Devil's Derivatives: The Untold Story of the Slick Traders and Hapless Regulators Who Almost Blew Up Wall Street . . . And Are Ready to Do It Again
by Nicholas Dunbar
Published 11 Jul 2011

By the end of 2010, Ireland was forced into using the new facility, with Portugal anticipated to follow suit. The creeping malaise caused by too much debt was never going to be easy to fix. What was clear by the end of summer 2010 was that a crisis forged in the workshops of investment bank financial innovators had metamorphosed into a crisis all too familiar to economic historians. As Carmen Reinhart and Kenneth Rogoff point out in their book, This Time Is Different, there is a clear pattern to the credit booms that have bankrupted banks and nation states over the past eight centuries.5 What was different in 2010 was the global scale of the problem, and how regulators in the world’s developed countries, led by the United States and Britain, were ill suited to handle the burden of their failed consumer finance and banking systems.

…

Morgan Chase in February 2010, www.jpmorgan.com. 2. See U.K. Office of Budget Responsibility prebudget report, June 2010, http://budgetresponsibility.independent.gov.uk/index.html. 3. James Sassoon, interview by author, November 2009. 4. Nicholas Dunbar, “Revealed: Goldman Sachs’ Mega-Deal for Greece,” Risk, July 2003, 20. 5. Carmen M. Reinhart and Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton, NJ: Princeton University Press, 2009). Acknowledgments Someone who fits Amartya Sen’s description of a rational fool would be fairly close to a psychopath. The economic world is full of these psychopaths: they are corporations.

Boomerang: Travels in the New Third World
by Michael Lewis
Published 2 Oct 2011

“I went looking for someone, anyone, who knew something about the history of sovereign defaults,” he said. He found the leading expert on the subject, a professor at Harvard named Kenneth Rogoff, who, as it happened, was preparing a book on the history of national financial collapse, This Time Is Different: Eight Centuries of Financial Folly, with fellow scholar Carmen Reinhart. “We walked Rogoff through the numbers,” said Bass, “and he just looked at them, then sat back in his chair, and said, ‘I can hardly believe it is this bad.’ And I said, ‘Wait a minute. You’re the world’s foremost expert on sovereign balance sheets. You are the go-to guy for sovereign trouble.

The Signal and the Noise: Why So Many Predictions Fail-But Some Don't
by Nate Silver
Published 31 Aug 2012

“You may know what to pay for House A versus House B versus House C because you can say one has a kitchen with gadgets that is worth $500 more than House B, which has a kitchen with no gadgets. But you don’t know what the price of a house should be.” 86. Carmen M. Reinhart and Kenneth S. Rogoff, “The Aftermath of the Financial Crisis,” Working Paper 14656, NBER Working Paper Series, National Bureau of Economic Research, January 2009. http://www.bresserpereira.org.br/terceiros/cursos/Rogoff.Aftermath_of_Financial_Crises.pdf. 87. Carmen M. Reinhart and Vincent R. Reinhart, “After the Fall,” presentation at Federal Reserve Bank of Kansas City Jackson Hole Symposium, August 2010. http://www.kcfed.org/publicat/sympos/2010/reinhart-paper.pdf. 88.

…

Act III: This Time Wasn’t Different Once the housing bubble had burst, greedy investors became fearful ones who found uncertainty lurking around every corner. The process of disentangling a financial crisis—everyone trying to figure out who owes what to whom—can produce hangovers that persist for a very long time. The economists Carmen Reinhart and Kenneth Rogoff, studying volumes of financial history for their book This Time Is Different: Eight Centuries of Financial Folly, found that financial crises typically produce rises in unemployment that persist for four to six years.86 Another study by Reinhart, which focused on more recent financial crises, found that ten of the last fifteen countries to endure one had never seen their unemployment rates recover to their precrisis levels.87 This stands in contrast to normal recessions, in which there is typically above-average growth in the year or so following the recession88 as the economy reverts to the mean, allowing employment to catch up quickly.

Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth
by Michael Jacobs and Mariana Mazzucato
Published 31 Jul 2016

The presumption that ‘the self-interest of organisations, specifically banks, is such that they were best capable of protecting shareholders and equity in the firms’ had proved incorrect.8 Contrary to the claims of the ‘efficient markets hypothesis’ which underpinned that assumption, financial markets had systematically mispriced assets and risks, with catastrophic results.9 The financial crash of 2008 was the most severe since that of 1929. But as Carmen Reinhart and Kenneth Rogoff have pointed out, since most countries undertook financial liberalisation in the 1970s and 1980s, there has been a marked increase in the frequency of banking crises (see Figure 1).10 Globally, in the period 1970 to 2007, the International Monetary Fund has recorded 124 systemic bank crises, 208 currency crises and 63 sovereign debt crises.11 For modern capitalism instability has become, not the exception, but a seemingly structural feature.

SUPERHUBS: How the Financial Elite and Their Networks Rule Our World
by Sandra Navidi
Published 24 Jan 2017

Senate Banking Committee and had worked at Soros Fund Management, gave the welcoming speech. The discussions were thoroughly academic and to the financial layperson would probably have seemed hopelessly abstract. Harvard Professor Ken Rogoff and George Soros spoke about the emerging economic and political order, while Columbia University Professor Jeffrey Sachs and Carmen Reinhart of the Peterson Institute discussed postcrisis macroeconomic management. Former U.K. prime minister Gordon Brown, whom I had previously thought to be rather dry, enthralled the audience with an insightful and passionately delivered lunch keynote on global financial issues. The schedule was packed with sessions beginning in the early morning and stretching into the evening.

The Great Divide: Unequal Societies and What We Can Do About Them
by Joseph E. Stiglitz
Published 15 Mar 2015

All of this exposes the Republicans’ argument in favor of these food policies—a concern for our future, particularly the impact of the national debt on our children—as a dishonest and deeply cynical pretense. Not only has the intellectual undergirding of debt fetishism been knocked out (with the debunking of work by the Harvard economists Carmen M. Reinhart and Kenneth S. Rogoff that tied slowed growth to debt-to-GDP ratios above 90 percent). The Republicans’ farm bill also clearly harms both America’s children and the world’s in a variety of ways. For these proposals to become law would be a moral and economic failure for the country. ______________ * New York Times, November 16, 2013.

…

As in many other countries, conservative governments are arguing for cutbacks in government spending, on the grounds that fiscal deficits imperil their future. In the case of Australia, however, such assertions ring particularly hollow—though that has not stopped Abbott’s government from trafficking in them. Even if one accepts the claim of the Harvard economists Carmen Reinhart and Kenneth Rogoff that very high public debt levels mean lower growth—a view that they never really established and that has subsequently been discredited—Australia is nowhere near that threshold. Its debt-to-GDP ratio is only a fraction of that of the U.S., and one of the lowest among the OECD countries.

Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond: The Innovative Investor's Guide to Bitcoin and Beyond
by Chris Burniske and Jack Tatar
Published 19 Oct 2017

Typically, the logic goes that the markets have evolved from more primitive years, and financial engineering innovations have led to robust markets that can’t possibly crash. Time and again this thesis has been refuted by subsequent market crashes. In their well-regarded book This Time Is Different: Eight Centuries of Financial Folly, Carmen Reinhart and Kenneth Rogoff deliver a 300-page tour de force to prove that this time is never different. They describe how “this time is different” thinking was used to justify the sustainability of jubilant markets prior to the 1929 crash that led to the Great Depression. Proponents of “this time is different” thinking claimed that business cycles had been cured by the creation of the Federal Reserve in 1913.

Licence to be Bad
by Jonathan Aldred
Published 5 Jun 2019

Again, after the financial crisis Nobel laureate macroeconomist Tom Sargent, who had not once warned about imminent problems in the financial sector, asserted, ‘it is just wrong to say that this financial crisis caught modern macroeconomists by surprise’.29 David Miles, a macroeconomist who served on the Bank of England panel setting UK interest rates, took the opposite view, insisting that the crisis was inevitably a surprise, with no more clues in advance than the number on a winning lottery ticket: ‘Any criticism of economics that rests on its failure to predict the crisis is no more plausible than the idea that statistical theory needs to be rewritten because mathematicians have a poor record at predicting winning lottery ticket numbers.’30 And so it goes on. Recent austerity policies pursued in several countries were explicitly based on the research of Harvard economists Carmen Reinhart and Ken Rogoff, showing that economic growth falls sharply once the government debt-to-GDP ratio exceeds 90 per cent.31 Except it didn’t: in April 2013 a graduate student discovered a crucial error in their spreadsheet. It turned out that slow growth causes high debt, not the other way around, as Reinhart and Rogoff had implied.

The Great Reversal: How America Gave Up on Free Markets
by Thomas Philippon
Published 29 Oct 2019

TABLE 13.1 Top Ten Global Firms, Spring 2018 Company Country Market value ($ billion) Apple US 926.9 Amazon US 777.8 Alphabet US 766.4 Microsoft US 750.6 Facebook US 541.5 Alibaba China 499.4 Berkshire Hathaway US 491.9 Tencent Holdings China 491.3 JPMorgan Chase US 387.7 ExxonMobil US 344.1 These companies are stars, undoubtedly. But there have always been stars in the economy. Are these stars different? Carmen Reinhart and Kenneth Rogoff (2009) have famously shown that thinking “this time is different” is the shortest way to a financial crisis. In macroeconomics, there is no such thing as “this time is different.” But, perhaps, matters could be different where the internet is concerned. There are some technological reasons to believe this time might be different.

Aftershocks: Pandemic Politics and the End of the Old International Order
by Colin Kahl and Thomas Wright
Published 23 Aug 2021

A TWO-TIER ECONOMY Billions of people around the world were fully concerned with basic needs: they may have lost their job or seen their wages cut; they may have quit their job to care for their kids; their kids might not be in school or have access to the internet to participate in school remotely. For these people, the Great Lockdown was far worse than the global financial crisis. “This situation is so dire that it deserves to be called a ‘depression’—a pandemic depression,” the economists Carmen Reinhart and Vincent Reinhart wrote in Foreign Affairs. “Unfortunately, the memory of the Great Depression has prevented economists and others from using that word, as the downturn of the 1930s was wrenching in both its depth and its length in a manner not likely to be repeated.”36 Major democracies saw their economies take an unprecedented hit in 2020.

…

Isabel Debre, “G-20 Agrees on Framework for More Debt Relief amid COVID-19,” Associated Press, November 13, 2020, https://apnews.com/article/dubai-united-arab-emirates-coronavirus-pandemic-g-20-summit-6729d0caf1bc639039447f07f3938a0b; Clemence Landers, “A Plan to Address the COVID-19 Debt Crises in Poor Countries and Build a Better Sovereign Debt System,” Center for Global Development, December 3, 2020, https://www.cgdev.org/publication/plan-address-covid-19-debt-crises-poor-countries-and-build-better-sovereign-debt-system; “COVID-19: Debt Service Suspension Initiative,” World Bank, https://www.worldbank.org/en/topic/debt/brief/covid-19-debt-service-suspension-initiative, accessed January 12, 2021; Homi Kharas and Meagan Dooley, “COVID-19’s Legacy of Debt and Debt Service in Developing Countries,” Brookings Institution, December 2020, 3, https://www.brookings.edu/wp-content/uploads/2020/12/COVID-19-legacy-of-debt_final.pdf.   34.  Wheatley, “Debt Dilemma.”   35.  Global Economic Prospects (Washington, DC: World Bank, January 2021), xvii, https://openknowledge.worldbank.org/bitstream/handle/10986/34710/9781464816123.pdf.   36.  Carmen Reinhart and Vincent Reinhart, “The Pandemic Depression,” Foreign Affairs, September/October 2020, https://www.foreignaffairs.com/articles/united-states/2020-08-06/coronavirus-depression-global-economy.   37.  Martin Crutsinger, “U.S. Economy Shrank by 3.5% in 2020 After Growing by 4% in Last Quarter,” Associated Press, January 28, 2021, https://apnews.com/article/us-economy-shrink-in-2020-b59f9be06dcf1da924f64afde2ce094c; Ben Dooley and Makiko Inoue, “Japan’s Growth Rebounds but Virus-Related Weakness Looms,” New York Times, February 14, 2021, https://www.nytimes.com/2021/02/14/business/japan-gdp-economy-coronavirus.html; Martin Arnold and Valentina Romei, “Eurozone Economy Drops into Double Digit Contraction,” Financial Times, February 2, 2021, https://www.ft.com/content/f8efe708-3c22-493b-88bd-855ec6d98522; Danica Kirka, “UK Economy Suffers Biggest Drop Since 1709,” Associated Press, February 12, 2021, https://apnews.com/article/coronavirus-pandemic-economy-4f0b6285a57c8b2929e2aceb864e7675; Prinesha Naidoo, “S.

Manias, Panics and Crashes: A History of Financial Crises, Sixth Edition
by Kindleberger, Charles P. and Robert Z., Aliber
Published 9 Aug 2011

The global inflation of the 1970s resulted from a combination of expansive US monetary policy and expansive monetary policies in Europe and Japan as their large balance of payments surpluses led to rapid growth in their holdings of international Reserve assets. Central bank holdings of international reserve assets again increased rapidly in the mid-1990s and the late 1990s.59 Three years later a French economist, Pascal Blanqué, wrote of a US credit bubble.60 In a similar view, Graciela Kaminsky and Carmen Reinhart blame foreign countries for printing money and the United States for running a persistent balance-of-payments deficit.61 The central question is whether a central bank can restrain the instability of credit and slow speculation to avoid its dangerous extension. If the monetary authorities fix some proxy for the money supply or for liquidity, or if they focus directly on the rate of interest, can the upswing and decline of the crisis be moderated or eliminated entirely?

…

For a defense of central banking, see Charles Goodhart, The Evolution of Central Banks (Cambridge: Cambridge University Press, 1989). 59. ‘The Post-1990 Surge in World Currency Reserves’, Conjuncture, 26th year, no. 9 (October 1996), pp. 2–12. 60. Pascal Blanqué, ‘US Credit Bubble.com’, Conjuncture, 29th year, no. 4 (April 1999), pp. 12–21. 61. Graciela L. Kaminsky and Carmen W. Reinhart, ‘The Twin Crises: the Causes of Banking and Balance-of-Payments Problems’, American Economic Review (June 1999), pp. 433–500. 62. Gayer, Rostow, and Schwartz, Growth and Fluctuation, vol. 1, p. 300. 63. Hughes, Fluctuations, p. 12. 64. Ibid., p. 261. 65. Elmer Wood, English Theories of Central Banking Control, 1819–1858, with Some Account of Contemporary Procedures (Cambridge, Mass.: Harvard University Press, 1939), p. 147. 66.

The Economists' Hour: How the False Prophets of Free Markets Fractured Our Society
by Binyamin Appelbaum
Published 4 Sep 2019

Some economists howled in protest. The Italian economists Alberto Alesina and Silvia Ardagna published a study in October 2009 that said governments could spur economic growth by reducing budget deficits — in other words, by spending less money rather than more.6 A few months later, in January 2010, the American economists Carmen Reinhart and Kenneth Rogoff published a paper purporting to identify a kind of red line for government borrowing: they said that when debts exceeded 90 percent of a nation’s annual economic output, growth declined.7 The European Commission’s head of economic and monetary affairs, Olli Rehn, started talking about a “90-percent rule.”

…

Alesina and Ardagna were graduates of the School of Economics at Bocconi University in Milan, founded by the conservative economist and politician Luigi Einaudi, who served as Italy’s president from 1948 to 1955. The school became associated with the economic theory that deficit reduction could spur economic growth. 7. Carmen M. Reinhart and Kenneth S. Rogoff, “Growth in a Time of Debt,” January 2010, National Bureau of Economic Research Working Paper 15639. 8. The error was discovered by Thomas Herndon, a graduate student at the University of Massachusetts, Amherst, who was doing his homework: The assignment was to pick a published economics paper and try to replicate the results.

Investing Demystified: How to Invest Without Speculation and Sleepless Nights
by Lars Kroijer
Published 5 Sep 2013

If you have a longer investment horizon, then match the investment horizon with the maturity of your minimal risk bond portfolio. You will have to accept interest rate risk even if you avoid inflation risk by buying inflation-adjusted bonds. 1 For those who don’t think government bonds can default I would encourage you to read This Time is Different: Eight Centuries of Financial Folly by Carmen Reinhart and Kenneth Rogoff (Princeton University Press, 2011). The authors make a mockery of the belief that governments rarely default and that we are somehow now protected from the catastrophic financial events of the past. 2 There are cases where the yield curve is reversed and shorter-term bonds yield more than longer-term ones, but these cases are less frequent. 3 Imagine the scenario where you want to hold one-month government bonds.

Fed Up!: Success, Excess and Crisis Through the Eyes of a Hedge Fund Macro Trader
by Colin Lancaster
Published 3 May 2021

TALF (Term Asset-Backed Securities Loan Facility) allowed the Fed to lend money to banks and other financial institutions on a nonrecourse basis. Because the money came from the Fed and not the Treasury, there was no congressional oversight of how the funds were doled out. 8 “Growth in a Time of Debt,” also known by its authors’ names as Reinhart–Rogoff, is an economics paper by American economists Carmen Reinhart and Kenneth Rogoff. The paper argues that when “gross external debt reaches 60% of GDP,” a country’s annual growth declines by 2%, and “for levels of external debt in excess of 90%,” GDP growth is “roughly cut in half.” Appearing in the aftermath of the financial crisis of 2007–2008, the evidence for the 90% debt threshold hypothesis provided support for pro-austerity policies. 9 Thank you Hunter Thompson.

The End of Alchemy: Money, Banking and the Future of the Global Economy
by Mervyn King
Published 3 Mar 2016

Rae, John (1895), The Life of Adam Smith, Macmillan and Co., London. Reddaway, W. Brian (1939), The Economic Consequences of a Declining Population, Allen and Unwin, London. Reinhart, Carmen M. and Kenneth S. Rogoff (2009), This Time is Different: Eight Centuries of Financial Folly, Princeton University Press, Princeton, New Jersey. Reinhart, Carmen, Vincent Reinhart and Kenneth Rogoff (2015), ‘Dealing with Debt’, Journal of International Economics, forthcoming. Ricardo, David (1816), Proposals for an Economical and Secure Currency, T. Davison, London. Roberts, Andrew (2014), Napoleon the Great, Allen Lane, London. Roberts, Richard (2013), Saving the City, Oxford University Press, Oxford.

The Global Minotaur
by Yanis Varoufakis and Paul Mason
Published 4 Jul 2015

These words were written by Karl Marx in 1844, in the text entitled Economic and Philosophical Manuscripts. Chapter 2 1. See Jared Diamond (2006) Guns, Germs and Steel, New York: Norton. 2. Ibn Khaldun (1967) The Muqaddimah: An introduction to history, trans. Franz Rosenthal, Bollingen Series XLIII, Princeton, NJ: Princeton University Press. 3. For a good account of such calamities, see Carmen Reinhart and Kenneth Rogoff (2009) This Time Is Different: Eight centuries of financial folly, Princeton, NJ: Princeton University Press. 4. Once all your music, films, applications, addresses, etc. are on iTunes and readily accessible by any Apple product (iPod, iPhone, iPad, etc.), the opportunity cost of buying a Nokia or a Sony device is huge (even if these companies bring a better device to market) – you need to spend literally hours setting the new gadget up.

Crisis and Dollarization in Ecuador: Stability, Growth, and Social Equity
by Paul Ely Beckerman and Andrés Solimano
Published 30 Apr 2002

“On Dollarization.” Processed. ———. 2000. “Capital Markets and the Exchange Rate with Special Reference to the Dollarization Debate in Latin America.” http://www.bsos.umd.edu/econ/clecalvo.htm. ———. 2002. “The Case for Hard Pegs.” http://www.bsos.umd.edu/ econ/clecalvo.htm. Calvo, Guillermo, and Carmen Reinhart. 2000. “When Capital Flows Come to a Sudden Stop.” In Peter Kenen and Alexander Swoboda, eds., Key Issues in the Reform of the International Monetary and Financial System. International Monetary Fund, Washington, D.C. ———. 2002. “Fear of Floating.” Quarterly Journal of Economics, forthcoming. www.puaf.umd.edu/faculty/papers/reinhart/papers.html.

Rethinking Money: How New Currencies Turn Scarcity Into Prosperity
by Bernard Lietaer and Jacqui Dunne
Published 4 Feb 2013

Gerard Caprio and Daniela Klingebiel, “Bank Insolvencies: Cross- Country Experience,” Policy Research Working Paper, no. 1620 (Washington, DC: World Bank, Policy and Research Department, 1996); J. Frankel and A. Rose, “Currency Crashes in Emerging Markets: An Empirical Treatment,” Journal of International Economics 4 (1996): 351– 366; Graziela L. Kaminsky and Carmen M. Reinhart, “The Twin Crisis: The Causes of Banking and Balance of Payment Problems,” American Economic Review 89, no. 3 (1999): 473– 500; and, for the data after 2006, Luc Laevan and Fabian Valencia, “Resolution of Banking Crises: The Good, the Bad, 225 226 NOTES and the Ugly,” IMF Working Paper 10/146 (Washington, DC: International Monetary Fund, 2010), 4. www.imf.org /external /pubs/ft /wp/2010/wp10146.pdf /. 3. www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf and www.telegraph.co.uk /fi nance/comment/9623863/IMFs-epic-plan-to-conjure-away-debt-and- deth rone -bankers.html. 4.

…

Luc Laevan and Fabian Valencia, “Resolution of Banking Crises: The Good, the Bad, and the Ugly,” IMF Working Paper 10/146 (Washington, DC: International Monetary Fund, 2010), 4. www.imf.org /external /pubs/ft /wp/2010/wp10146.pdf; Gerard Caprio and Daniela Klingebiel, “Bank Insolvencies: Cross- Country Experience,” Policy Research Working Paper PRWP1620 (Washington, DC: World Bank, 1996); Graziela L. Kaminsky and Carmen M. Reinhart, “Twin Crises: The Causes of Banking and Balance-of-Payments Problems,” American Economic Review, American Economic Association, 89, no. 3 (June 1999): 473– 500. 6. Fritz Schwartz, Das Experiment von Wörgl (Bern, Switzerland: Genossenschaft Verlag Freiwirtschaftlicher Schriften, 1951). 7. See M.

The Economics of Belonging: A Radical Plan to Win Back the Left Behind and Achieve Prosperity for All
by Martin Sandbu
Published 15 Jun 2020

Olivier Blanchard, “Public Debt and Low Interest Rates” (presidential address, American Economic Association, January 2019), https://www.aeaweb.org/aea/2019conference/program/pdf/14020_paper_etZgfbDr.pdf. Chapter 9. A Smarter Financial System 1. For a view of why this was, see Martin Sandbu, “Talking ’bout a Revolution,” Financial Times, 19 April 2013, https://www.ft.com/content/91a3782a-a80f-11e2-b031-00144feabdc0. 2. See, for example, Carmen Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly, Princeton, NJ: Princeton University Press, 2009; Atif Mian and Amir Sufi, House of Debt: How They (and You) Caused the Great Recession, and How We Can Prevent It from Happening Again, Chicago: University of Chicago Press, 2015; and Valerie Cerra and Sweta Saxena, “Growth Dynamics: The Myth of Economic Recovery,” American Economic Review 98, no. 1 (2008): 439–57, https://doi.org/10.1257/aer.98.1.439. 3.

Stolen: How to Save the World From Financialisation
by Grace Blakeley
Published 9 Sep 2019

The idea that the UK is on the verge of a sovereign debt crisis is laughable. If anything, investors are demanding more government bonds than states like the UK are willing to issue. The second argument for austerity is that high levels of debt curb economic growth. This argument has featured heavily in the debate about austerity thanks to Carmen Reinhart and Kenneth Rogoff, the authors of This Time Is Different: Eight Centuries of Financial Folly, the book used to justify George Osborne’s austerity agenda. This Time Is Different argues that above a particular level — 90% of GDP — government debt has a negative and statistically significant impact on growth.

Finance and the Good Society
by Robert J. Shiller
Published 1 Jan 2012

I too have contributed to this discussion, in my scholarly writings on market volatility and in books such as Irrational Exuberance. The current severe nancial crisis has called forth questions not only about the system’s parts but also about nancial capitalism as a whole. This crisis—dubbed by Carmen Reinhart and Kenneth Rogo as the “Second Great Contraction,” a period of weakened economies around the world starting in 2007 but continuing for years after, mirroring the Great Contraction that followed the nancial crisis of 1929—has led to angry rejections of the value of financial capitalism. Given this experience, many wonder, what is the role of nance in the good society?

The Bankers' New Clothes: What's Wrong With Banking and What to Do About It
by Anat Admati and Martin Hellwig
Published 15 Feb 2013

Jordà et al. (2011) and Schularick and Taylor (2012) show that historically, recessions that have been associated with credit booms gone bust and with subsequent financial crises have been much larger and costlier than other types of recessions. On the slow recovery from the financial crisis in the United States, see Carmen Reinhart and Kenneth Rogoff, “Sorry, U.S. Recoveries Really Aren’t Different,” Bloomberg, October 15, 2012, and Martin Wolf, “A Slow Convalescence under Obama,” Financial Times, October 24, 2012. 20. For example, according to the Federal Reserve Bank of St. Louis, from February 2008 to September 2009, total nonfarm employment declined by 8.138 million.

That Used to Be Us
by Thomas L. Friedman and Michael Mandelbaum
Published 1 Sep 2011

By 2011, it had reached $14 trillion—the equivalent of the country’s GDP—with the prospect of increasing to $16 trillion by 2012 without countervailing steps. “Total American general government debt today is at a phenomenal level,” said Kenneth Rogoff, a professor of economics and public policy at Harvard University and formerly the chief economist at the International Monetary Fund. Rogoff is also the co-author with Carmen Reinhart of This Time Is Different: Eight Centuries of Financial Folly, which surveys the history of debt and financial crises. “By our benchmark,” Rogoff added, “when you take local, state, and federal government debt together we are at our all-time high—above 119 percent of GDP. That is even higher than at the end of World War II, which is the only time before now that we have ever been that high … We are at the outer edge of the envelope of the last two hundred years of experience.

Adam Smith: Father of Economics
by Jesse Norman
Published 30 Jun 2018

History of manias, bubbles and crashes: there is considerable controversy as to the correct explanation for different bubbles or manias. See e.g. Charles P. Kindleberger, Manias, Panics, and Crashes, 4th edn, John Wiley 2000; Robert Shiller, Irrational Exuberance, Princeton University Press 2000; Peter Garber, Famous First Bubbles: The Fundamentals of Early Manias, MIT Press 2000; and for finance, Carmen Reinhart and Kenneth Rogoff, This Time is Different, Princeton University Press 2011 Keynes’s beauty competition: J. M. Keynes, The General Theory of Employment, Interest and Money, Macmillan 1936 Asset markets and credit creation: see George Cooper, The Origin of Financial Crises, 2nd edn, Harriman House 2010 Hyman Minsky: see his Stabilizing an Unstable Economy, Yale University Press 1986.

What Went Wrong: How the 1% Hijacked the American Middle Class . . . And What Other Countries Got Right
by George R. Tyler
Published 15 Jul 2013

The discipline of the gold standard and prudence of American presidents produced some global fiscal stability in the post–World War II era. Between 1960 and the early 1980s, for example, severe sovereign credit crises involving default or restructuring afflicted fewer than 15 percent of countries. That was easily the lowest share since 1827. But, as economists Carmen Reinhart and Kenneth Rogoff document in their book, This Time is Different, the number of profligate nations that became severely indebted leaped in the Reagan era. By the end of Ronald Reagan’s Presidency, nearly 40 percent of nations across the globe had succumbed to his siren song of wildcat banking and were dealing with severe debt crises.38 America hopefully will not face a debt crisis in the years ahead.

…

Augustine, Alexander Maasry, Damilola Sobo, and Di Wang, “Sovereign Fiscal Responsibility Index 2011,” Stanford University and the Comeback America Initiative, March 23, 2011. 36 Publicly held debt statistics are from “Fiscal Year 2013 Historical Tables,” Office of Management and Budget, Table 7.1, 2013. 37 Niall Ferguson, Civilization (New York: Penguin Group, 2011), 149–50. 38 Carmen M. Reinhart and Kenneth S. Rogoff, This Time Is Different, fig 1. John Mauldin and Jonathan Tepper, Endgame (Hoboken, NJ: John Wiley & Sons, 2011), 27. CHAPTER 11 1 David Stockman, “Four Deformations of the Apocalypse.” 2 Michale Sauga and Peter Müller, “Interview with German Finance Minister Schäuble,” Der Spiegel, Nov. 8, 2010. 3 Joseph E.

The Art of Statistics: How to Learn From Data
by David Spiegelhalter
Published 2 Sep 2019

All these issues should have been foreseen and avoided by careful piloting. The easiest way for Analysis to go wrong is simply to make a mistake. Many of us will have made errors in coding or spreadsheets, but perhaps not with the consequences of the following examples: • Prominent economists Carmen Reinhart and Kenneth Rogoff published a paper in 2010 which strongly influenced attitudes to austerity. A PhD student later found that five countries had been inadvertently left out of their main analysis due to a simple spreadsheet error.*4 • A programmer for AXA Rosenberg, a global equity investment firm, incorrectly programmed a statistical model so that some of its calculated risk elements were too small by a factor of ten thousand, leading to $217 million in losses to clients.

The Art of Statistics: Learning From Data
by David Spiegelhalter
Published 14 Oct 2019

All these issues should have been foreseen and avoided by careful piloting. The easiest way for Analysis to go wrong is simply to make a mistake. Many of us will have made errors in coding or spreadsheets, but perhaps not with the consequences of the following examples: Prominent economists Carmen Reinhart and Kenneth Rogoff published a paper in 2010 which strongly influenced attitudes to austerity. A PhD student later found that five countries had been inadvertently left out of their main analysis due to a simple spreadsheet error.fn2 4 A programmer for AXA Rosenberg, a global equity investment firm, incorrectly programmed a statistical model so that some of its calculated risk elements were too small by a factor of ten thousand, leading to $217 million in losses to clients.

Adaptive Markets: Financial Evolution at the Speed of Thought
by Andrew W. Lo
Published 3 Apr 2017

The second mistake on Stiglitz’s list was: “The decision in April 2004 by the Securities and Exchange Commission, at a meeting attended by virtually no one and largely overlooked at the time, to allow big investment banks to increase their debt-to-capital ratio (from 12:1 to 30:1, or higher) so that they could buy more mortgage-backed securities, inflating the housing bubble in the process.”19 This narrative even made its way into the historical record, through economists Carmen Reinhart and Ken Rogoff’s highly regarded and otherwise meticulously researched history of eight centuries of financial crises, This Time Is Different: “What could in retrospect be recognized as huge regulatory mistakes, including the deregulation of the subprime mortgage market and the 2004 decision of the Securities and Exchange Commission to allow investment banks to triple their leverage ratios (that is, the ratio measuring the amount of risk to capital), appeared benign at the time.”20 And in January 2011, nearly two years after Sirri’s speech correcting the mistaken interpretation of the 2004 SEC rule change, the macroeconomist Robert Hall criticized “so-called deregulation” for its contribution to the crisis in a speech he delivered at MIT: I think that the one most important failure of regulation is easy to identify.

The Price of Time: The Real Story of Interest
by Edward Chancellor
Published 15 Aug 2022

Russell Napier, ‘Capital Management in an Age of Financial Repression’, Orlock Advisors, 6 September 2016. 7. Russell Napier, ‘The Silent Revolution: How to Inflate Away Debt … with More Debt’, Orlock Advisors, 24 June 2020. 8. Carmen M. Reinhart et al., ‘Financial Repression Redux’, IMF Finance & Development, 48 (1), June 2011. The authors point out that over the previous four years, interest rates in 21 advanced economies had been negative in real terms for around half the time. 9. Carmen M. Reinhart and Jacob F. Kirkegaard, ‘Financial Repression: Then and Now’, VoxEU, March 2012. Reinhart and Kirkegaard state that under the Basel III regulations, bank holdings of government debt required lower capital requirements.

The Upside of Inequality
by Edward Conard
Published 1 Sep 2016

“Global Wealth Report 2015,” Credit Suisse Research, October 2015, https://publications.credit-suisse.com/tasks/render/file/?fileID=F2425415-DCA7-80B8-EAD989AF9341D47E. 14. Chris Gaither and Dawn Chmielewski, “Fears of Dot-Com Crash, Version 2.0,” Los Angeles Times, July 16, 2006, http://articles.latimes.com/2006/jul/16/business/fi-overheat16. 15. Carmen Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton, NJ: Princeton University Press, 2009). 16. Lawrence Summers, “The Future of Work in the Age of the Machine: A Hamilton Project Policy Forum,” National Press Club, February 19, 2015, http://www.hamiltonproject.org/events/the_future_of_work_in_the_age_of_the_machine. 17.

MegaThreats: Ten Dangerous Trends That Imperil Our Future, and How to Survive Them
by Nouriel Roubini
Published 17 Oct 2022

Many academic colleagues—some with invaluable policy and/or markets experience—have been a source of great food for thought and important ideas: Ken Rogoff, Barry Eichengreen, Dani Rodrik, Maury Obstfeld, Jeff Frankel, Bill Nordhaus, Larry Kotlikoff, Jeff Sachs, Michael Pettis, Alberto Alesina, Richard Portes, Helen Rey, Paul Krugman, Carmen Reinhart, Nassim Taleb, Raghu Rajan, Joe Stiglitz, Niall Ferguson, Robert Shiller, Kishore Mahbubani, Willem Buiter, Giancarlo Corsetti, Brad DeLong, and Steven Mihm (my co-author of Crisis Economics). There are many current or former policy makers—some with a distinguished academic or markets background—whom I have interacted with over the decades.

The Fissured Workplace
by David Weil
Published 17 Feb 2014

National income is the sum of employee, proprietor, rental, corporate, interest, and government income less the subsidies paid by government to any of those groups. Analysis of the percentage of gross domestic product shows the same trends: corporate profits after tax hit an all-time high as a percentage of GDP (over 10%), while the share of GDP going to wages and salary fell to an all-time low of 44%. 47. Kenneth Rogoff and Carmen Reinhart have objected that the term “Great Recession” itself is unhelpful since it implies that the recent recession is similar to typical downturns, just a particularly deep one. Instead, they refer to it as the “second great contraction” (the first being the Great Depression). See Reinhart and Rogoff (2009). 48.

How to Be a Liberal: The Story of Liberalism and the Fight for Its Life
by Ian Dunt
Published 15 Oct 2020

They started to treat traditionally safe government bonds – the IOUs issued for national borrowing – as uncertain. That drove up interest rates on borrowing, which would in turn plunge countries further into the red, trapping them in debt servitude. This argument was given additional potency in 2010 by the publication of a research paper by two former IMF economists, Carmen Reinhart and Kenneth Rogoff, called Growth in a Time of Debt. It contained an alarming finding. Once public debt passed 90 per cent of GDP, it said, something happened. Economic growth slowed. The economy couldn’t get out from under the sheer weight of state borrowing. Government revenue dwindled, more and more money was spent on servicing the debt, and hopes of ever paying it off vanished.

Money: The Unauthorized Biography
by Felix Martin
Published 5 Jun 2013

Readers rushed to consult the great financial historian, Charles Kindleberger.1 To learn of his discovery that “financial crises have tended to appear at roughly ten-year intervals for the last 400 years or so” was either disturbing or comforting, depending on one’s perspective.2 Within a couple of years, however, the economists Carmen Reinhart and Kenneth Rogoff had published an even more comprehensive investigation into the history of financial crises. Its ominous subtitle warned the reader to expect not just four but “Eight Centuries of Financial Folly.”3 And as Tactitus’ account of the credit crunch under the Emperor Tiberius shows, monetary society has been prone to the problem of growing indebtedness ending in a crisis of solvency for much longer even than that.

Nobody's Fool: Why We Get Taken in and What We Can Do About It
by Daniel Simons and Christopher Chabris
Published 10 Jul 2023

Across three studies, including one with a nationally representative sample of 1,109 people, ideological match increased the chances of rating something as logical by at least 15 percent and sometimes more than doubled it. The tendencies to apply greater scrutiny to outcomes we don’t predict and to accept conclusions that match what we already believe contribute to a wide range of errors in science, business, and daily life. The economists Carmen Reinhart and Kenneth Rogoff learned this lesson the hard way. When analyzing historical data about the relationship between government debt and economic growth, they accidentally failed to “fill down” a formula to the bottom of a column in their Excel spreadsheet. As a result, they mistakenly concluded that once a country’s debt reaches 90 percent of its gross domestic product (GDP), the growth prospects for its economy are fatally weakened.

Not Working: Where Have All the Good Jobs Gone?
by David G. Blanchflower
Published 12 Apr 2021

Galbraith also noted that “the descent is always more sudden than the increase: a balloon that has been punctured does not deflate in an orderly way” (xiv). And so it was. The Great Recession started in the Arizona, Florida, California, and Nevada housing markets and grew and grew as the subprime housing market collapsed. It spread around the world and took banks down with it. As Carmen Reinhart and Kenneth Rogoff (2009) have famously noted, financial crises take an inordinate amount of time for economies to recover from. This book will be published a dozen years after the start of the Great Recession, which the National Bureau of Economic Research (NBER) estimates started in the United States in December 2007.7 In most other advanced countries, including the UK, France, Japan, and Italy, it started a few months later.

Men Without Work
by Nicholas Eberstadt
Published 4 Sep 2016

It is possible that the anemic state of the U.S. macroeconomy is being exaggerated by measurement issues—productivity improvements from information technology, for example, have been oddly elusive in our officially reported national output—but few today imagine that such concealed gains would totally transform our view of the real economy’s true performance. 4.Carmen M. Reinhart and Kenneth S. Rogoff, “Recovery from Financial Crises: Evidence from 100 Episodes,” American Economic Review: Papers and Proceedings 104, no. 5: 50–55. http://scholar.harvard.edu/files/rogoff/files/aer_104-5_50-55.pdf. 5.Cf. Robert J. Gordon, The Rise and Fall of American Growth: The U.S.

How Will Capitalism End?
by Wolfgang Streeck
Published 8 Nov 2016

CHAPTER TWO 1An earlier version of this chapter was given as the 2011 Max Weber Lecture at the European University Institute, Florence. I am grateful to Daniel Mertens for his research assistance. Published in: New Left Review 71, September/October 2011, pp. 5–29. 2For the term ‘Great Recession’, see Carmen Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly, Princeton, NJ: Princeton University Press 2009. 3The classic statement is Buchanan and Tullock, The Calculus of Consent: Logical Foundations of Constitutional Democracy. 4See Edward Thompson, ‘The Moral Economy of the English Crowd in the Eighteenth Century’, Past & Present, vol. 50, no. 1, 1971; and James Scott, The Moral Economy of the Peasant: Rebellion and Subsistence in Southeast Asia, New Haven, CT: Yale University Press 1976.

The Code of Capital: How the Law Creates Wealth and Inequality
by Katharina Pistor
Published 27 May 2019

Reuters Staff, “IMF projects Venezuela inflation will hit 1,000,000 percent in 2018. Reuters Business News, July 23, 2018, available online at www.reuters.com (last accessed August 8, 2018). 57. Kim Oosterlinck, “Sovereign Debt Defaults: Insights from History,” Oxford Review of Economic Policy 29, no. 4 (2013):697–714; see also Carmen Reinhart and Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton, NJ: Princeton University Press, 2009). 58. M. Aycard, Credit Mobilier (Brussels, Leipzig, Livourne: A. Lacroix, Verboeckhoven & Cie, 1867). 59. Merton as quoted in McKinsey Global Institute, “Mapping Global Capital Markets” (New York: McKinsey Global Institute, 2008), p. 136. 60.

Value of Everything: An Antidote to Chaos The
by Mariana Mazzucato
Published 25 Apr 2018

You might imagine they are arrived at through some kind of scientific process - but if so, you'd be wrong. These numbers are taken out of thin air, supported by neither theory nor practice. Let's start with debt. In 2010 the American Economic Review published an article by two top economists, professors at Harvard University: Carmen Reinhart, ranked the following year by the Bloomberg Markets magazine among the ‘Most Influential 50 in Finance'; and Kenneth Rogoff, a former chief economist of the IMF.4 In this piece the pair claimed that when the size of government debt (as a proportion of GDP) is over 90 per cent (much higher than the 60 per cent of the Maastricht Treaty, but still lower than that of many countries), economic growth falls.

Money and Government: The Past and Future of Economics
by Robert Skidelsky
Published 13 Nov 2018

By November 2010 he was writing: ‘sometimes, not always, some fiscal adjustments based upon spending cuts are not associated with economic downturns’.21 But the damage had been done. Since 2011 little has been heard of ‘expansionary fiscal contraction’. We got the contraction, but not the expansion. 231 M ac roe c onom ic s i n t h e C r a s h a n d A f t e r , 2 0 0 7 – Reinhart and Rogoff and the 90 per cent barrier Two American economists, Carmen Reinhart and Kenneth Rogoff, produced another correlation to bolster the austerity case. They attributed the ‘vast range of crises’ they had analysed to ‘excessive debt accumulation’.22 They noticed that, once the public debt–GDP ratio crashed through the 90 per cent barrier, ‘growth rates are roughly cut in half’. 23 Early in 2013 researchers at the University of Massachusetts examined the data behind the Reinhart–Rogoff work and found that the results were partly driven by a spreadsheet error: More importantly, the results weren’t at all robust: using standard statistical procedures rather than the rather odd approach Reinhart and Rogoff used, or adding a few more years of data, caused the 90% cliff to vanish.

The Tyranny of Nostalgia: Half a Century of British Economic Decline
by Russell Jones
Published 15 Jan 2023

Moreover, policies such as those advocated by Alesina and his colleagues can be especially damaging if they are applied when output is already falling, while economic performance is generally better when fiscal stimulus is not withdrawn too soon.11 Again, however, by the time Alesina et al. had been forced to row back, the damage was done. A third inspiration for fiscal conservatives emerged from the magisterial work of Carmen Reinhart and Kenneth Rogoff on the history of financial crises. Their research suggested that sovereign debt crises followed banking crises some 80% of the time. More pertinently, they claimed that when the public debt burden exceeded a figure of around 90% of GDP, growth tended to decelerate.12 But this too proved bogus.

Buying Time: The Delayed Crisis of Democratic Capitalism
by Wolfgang Streeck
Published 1 Jan 2013

Hard Times: The Divisive Toll of the Economic Slump
by Tom Clark and Anthony Heath
Published 23 Jun 2014

Niall Ferguson, ‘A long shadow’, Financial Times, 22 September 2008, at: www.ft.com/cms/s/0/aeb88d8a–8800–11dd-b114–0000779fd18c.html#axzz2WahpoyYx 4. One analysis of post-war financial crises estimates that unemployment rises by an average of 7 percentage points, while output falls an average of 9%, the latter taking place over the course of two years; whereas the average ‘non-financial’ recession lasts less than a year. See Carmen M. Reinhart and Kenneth S. Rogoff, ‘The aftermath of financial crises’, American Economic Review, 99:2 (2009), pp. 466–72, at: www.ems.bbk.ac.uk/for_students/msc_ec­on/ETA2_EMEC025P/GZrhein.pdf 5. The 2001 census recorded a UK population of 59,113,500, whereas the 2011 census recorded a total of 63,285,100.

The Scandal of Money
by George Gilder
Published 23 Feb 2016

“Bankers used leverage to increase profitability and exploited the backstop of public guarantees. The profits largely flow to the employees [i.e., the bankers], while the losses are defrayed by the taxpayers and shareholders and even retirees (through artificially low interest rates). The Fed also provided $1.2 trillion in loans to banks (mostly secret at the time).” 4.Carmen M. Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton, NJ: Princeton University Press, 2011). 5.Mark Skousen, Vienna & Chicago, Friends or Foes? A Tale of Two Schools of Free-Market Economics (Washington, DC: Capital Press, 2005). Skousen superbly covers the canonical sources of Austrian and Chicago economic thought.

More: The 10,000-Year Rise of the World Economy
by Philip Coggan
Published 6 Feb 2020

“Too big not to fail”, The Economist, February 18th 2012 20. Barry Eichengreen and Kevin O’Rourke, “What do the new data tell us?”, March 7th 2010, https://voxeu.org/article/tale-two-depressions-what-do-new-data-tell-us-february-2010-update 21. “China seeks stimulation”, The Economist, November 10th 2008 22. Carmen Reinhart, “Eight years later: post-crisis recovery and deleveraging”, The Clearing House, https://www.theclearinghouse.org/banking-perspectives/2017/2017-q1-banking-perspectives/articles/post-crisis-recovery-and-deleveraging 23. Ibid. 24. Tooze, Crashed, op. cit. The three were Royal Bank of Scotland, UBS and Deutsche. 25.

The Price of Inequality: How Today's Divided Society Endangers Our Future
by Joseph E. Stiglitz
Published 10 Jun 2012

Like a good magician, a free-market economist succeeds by drawing spectators’ attention to what he wants them to see—the rabbit jumping out of the hat—while distracting their attention from other things—how the rabbit got into the hat in the first place. 6. Adam Smith, The Wealth of Nations (1776; New York: P. F. Collier, 1902), p. 207. 7. See Carmen Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton: Princeton University Press, 2009). 8. A derivative is just a financial instrument the return to which is derived on the basis of something else, e.g., the performance of a stock or the price of oil or the value of a bond.

Currency Wars: The Making of the Next Gobal Crisis
by James Rickards
Published 10 Nov 2011

Thinking with Data
by Max Shron
Published 15 Aug 2014

More Money Than God: Hedge Funds and the Making of a New Elite
by Sebastian Mallaby
Published 9 Jun 2010

This paper finds that a doubling in the size of private credit in an average developing country is associated with a 2 percentage point rise in annual economic growth, meaning that after thirty-five years the economy would be twice as large as it would have been without ample opportunities to borrow. 7. I am grateful to Gary Gladstein, the former chief administrative officer and managing director of Soros Fund Management, for these data. 8. Arminio Fraga, interview with the author, June 6, 2008. 9. Ibid. 10. Ibid. 11. The paper was by Graciela Kaminsky of the Federal Reserve and Carmen Reinhart of the International Monetary Fund. It was later published in the American Economic Review. 12. Fraga interview. 13. A participant at the meeting recalls, “It was really kind of a bombshell statement to make. Talk about being pathetically ignorant when you say that to the three guys from Soros.” 14.

Extreme Money: Masters of the Universe and the Cult of Risk
by Satyajit Das
Published 14 Oct 2011

Nomi Prins (2004) Other People’s Money: The Corporate Mugging of America, The New Press, New York. John Quiggin (2010) Zombie Economics: How Dead Ideas Still Walk Among Us, Princeton University Press, Princeton and Oxford. Raghuram G. Rajan (2010) Fault Lines: How Hidden Fractures Still Threaten the World Economy, Princeton University Press, Princeton and Oxford. Carmen Reinhart and Kenneth Rogoff (2010) This Time Is Different: Eight Centuries of Financial Folly, Princeton University Press, Princeton and Oxford. Barry Ritholtz (2009) Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook The World Economy, John Wiley, New Jersey. David Roche and Bob McKee (2008) New Monetarism, Independent Strategy Publications, London.

Stress Test: Reflections on Financial Crises
by Timothy F. Geithner
Published 11 May 2014

Sources: Compiled from Congressional Budget Office, Federal Deposit Insurance Corporation, Federal Reserve Board, Office of Management and Budget, and U.S. Treasury Department. Still, the financial crisis left tragic pain and suffering in its wake. Financial crises always do. The economists Carmen Reinhart and Ken Rogoff, my former IMF colleague who played chess in his head during meetings, have calculated that it takes the average country eight years after a financial crisis to reach its pre-crisis income levels. Even though we did much better than the average, and our crisis was much worse than the average, Americans absorbed a terrible blow.

Crashed: How a Decade of Financial Crises Changed the World
by Adam Tooze
Published 31 Jul 2018

This dealt the most serious blow to government finances that any of the major developed countries had suffered since World War II. The fate of Greece in 2010 seemed to spell out what lay in store for any state that slid over the edge into insolvency. Warnings ranged from outrageous rants and scaremongering from the likes of Beck to ultrarespectable academic research, most notably by two former IMF economists, Carmen Reinhart and Kenneth Rogoff. Following their surprise bestseller This Time Is Different: Eight Centuries of Financial Folly, in January 2010 Reinhart and Rogoff launched a research paper with the title “Growth in a Time of Debt.”2 This purported to show that as public debts passed the threshold of 90 percent of GDP, economic growth slowed down sharply.

Hubris: Why Economists Failed to Predict the Crisis and How to Avoid the Next One
by Meghnad Desai
Published 15 Feb 2015

–Apr. 1971). 4.Gerard Duménil and Dominique Lévy, “The Crisis of the Early 21st Century: Marxian Perspectives,” in R. Bellofiore and G. Vertova, eds, The Great Recession and the Contradictions of Contemporary Capitalism (Edward Elgar, Cheltenham, 2014). 5.Piketty, Capital in the Twenty-First Century, ch. 5. 6.Carmen M. Reinhart and Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton University Press, Princeton, NJ, 2009). 7.Lawrence Summers, “Why Stagnation May Prove to Be the New Normal,” Financial Times, Dec. 15, 2013. 8.Julia Leung, The Tides of Capital: How Asia Surmounted the Crisis and Is Now Guiding World Recovery (Official Monetary and Financial Institutions Forum, London, 2015). 9.Karl Marx, Preface to A Contribution to the Critique of Political Economy (1859), trans.

Prosperity Without Growth: Foundations for the Economy of Tomorrow
by Tim Jackson
Published 8 Dec 2016

The Quest: Energy, Security, and the Remaking of the Modern World
by Daniel Yergin
Published 14 May 2011

House of Representatives Committee on International Relations, Subcommittee on Asia and the Pacific, February 12, 1998 (“Central Asia,” cost-effectiveness); Interview with John Imle and Marty Miller; Steve Coll, Ghost Wars: The Secret History of the CIA, Afghanistan, and Bin Laden, from the Soviet Invasion to September 10, 2001 (New York: The Penguin Press, 2004), pp. 309–10. 12 Mikhail Gorbachev, “Soviet Lessons from Afghanistan,” International Herald Tribune, February 4, 2010. 13 Ahmed Rashid, Taliban: Militant Islam, Oil and Fundamentalism in Central Asia (New York: Yale University Press, 2000), ch. 3 (Islamic Emirate). 14 Christian Science Monitor, February 9, 2007 (“alien”); interviews; Washington Post, October 5, 1998 (“implement”). 15 Coll, Ghost Wars, pp. 309–13 (“no policy,” “authorized”); interview with John Imle; “Political and Economic Assessment of Afghanistan, Iran, Pakistan, and Turkemnistan/Russia,” Unocal Report, September 3, 1996 (“involvement”). 16 Unocal Report (“scenario”); Coll, Ghost Wars, pp. 331, 342 (“spiritual leaders”). 17 Rosita Forbes, Conflict: Angora to Afghanistan (London: Cassell, 1931), p. xvi (“anathema”); interviews with John Imle and Marty Miller. Chapter 4: “Supermajors” 1 Kenichi Ohmae, The Borderless World: Power and Strategy in the Interlinked Economy (New York: HarperCollins, 1991). 2 New York Times, December 1, 1997 (“reasonable”); Petroleum Intelligence Weekly, December 8, 1997 (“economic stars”). 3 Carmen Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton: Princeton University Press, 2009), pp. 18, 157 (“darling”); Timothy J. Colton, Yeltsin: A Life (New York: Basic Books, 2008), p. 411–15 (93 percent); interview with Stanley Fischer, Commanding Heights; interview with Robert Rubin, Commanding Heights. 4 New York Times, December 26, 1998 (“understatement”), January 10, 1999 (cafeteria). 5 Interview with Robert Maguire (“roster”); Petroleum Intelligence Weekly, August 31, 1998 (“Were he alive today”); Douglas Terreson, “The Era of the Super-Major,” Morgan Stanley, February 1998. 6 Ronald Chernow, Titan: The Life of John D.

The Marshall Plan: Dawn of the Cold War
by Benn Steil
Published 13 Feb 2018

Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State
by Paul Tucker
Published 21 Apr 2018

In Cambridge, MA, I have been helped, at Harvard, by Eric Beerbohm, Dan Carpenter, John Coates, Richard Cooper, Chris Desan, Marty Feldstein, Jeff Frieden, Ben Friedman, Jacob Gersen, Robin Greenwood, Peter Hall, Olivier Hart, Howell Jackson, Louis Kaplow, Frank Michelman, Joe Nye, Richard Parker, Carmen Reinhart, Ken Rogoff, David Scharfstein, Hal Scott, Emile Simpson, Jeremy Stein, Cass Sunstein, Richard Tuck, Adrian Vermeule, and Richard Zeckhauser; and although we never met, I should mention Jenny Mansbridge, who e-introduced me to Philip Pettit. At MIT: Bengt Holmstrom, Athanasios Orphanides, and David Singer.

The Power Surge: Energy, Opportunity, and the Battle for America's Future
by Michael Levi
Published 28 Apr 2013

In recent decades, though, economic growth has not translated into higher wages for most, suggesting that one ought to be cautious in expecting this phenomenon to increase the total number of U.S. jobs. 45. Alex Kowalski, “Trade Deficit of U.S. Unexpectedly Surges on Increase in Crude-Oil Imports,” Bloomberg, July 12, 2011, http://www.bloomberg.com/ news/2011-07-12/trade-deficit-of-u-s-unexpectedly-surges-on-increasein-crude-oil-imports.html. 46. Carmen M. Reinhart and Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton, N.J.: Princeton University Press, 2009). 47. Daniel Yergin, The Prize: The Epic Quest for Oil, Money, and Power (New York: Simon & Schuster, 1991), 613. 48. Clifford Krauss and Eric Lipton, “U.S. Inches Toward Goal of Energy Independence,” New York Times, March 22, 2012. 49.

The Making of Global Capitalism
by Leo Panitch and Sam Gindin
Published 8 Oct 2012

The quotation here is from the full transcript of the interview with Rubin for the PBS 2002 documentary The Commanding Heights, available at pbs.org. 5 Robert Litan, with Jonathan Roach and a Preface by Robert Rubin, American Finance for the 21st Century, Washington, DC: Brookings Institute, 1998, p. 5. 6 Quoted in Blustein, The Chastening, p. 295. 7 Carmen M. Reinhart and Kenneth S. Rogoff, “This Time is Different: A Panoramic View of Eight Centuries of Financial Crises,” NBER Working Paper No. 13882, March 2008, Table A.3. 8 Pauly, Who Elected the Bankers? esp. p.121. See also Michael Bordo, Ashoka Mody, and Nienke Oomes, “Keeping the Capital Flowing: The Role of the IMF,” IMF Working Paper WP/04/197, October 2004; and Barry Eichengreen and Richard Portes, “Managing the Next Mexico,” in Peter Kenen, ed., From Halifax to Lyon: What Has Been Done about Crisis Management?

The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics
by William R. Easterly
Published 1 Aug 2002

Nordhaus, William. 1994, “Do RealOutput and Real Wage Measures Capture Reality? The History of Lighting Suggests Not.” Yale Cowles Foundation discussion paper: 1078, September. Obstfeld, Maurice, and Kenneth Rogoff.1996. economics. Cambridge, Mass.: MIT Press. Foundations of InternationalMacro- Ogaki, Masao, Jonathan D. Ostry, and Carmen M. Reinhart. 1995. ”Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison.” IMF Working Paper WP/95/3. Pack, Howard, and John M. Page, Jr. 1994. “Accumulation, Exports, and Growth in the High-Performing Asian Economies.” Carnegie-Rochester Conference Series on Public Policy 40 (June): 199-250.

The Glass Half-Empty: Debunking the Myth of Progress in the Twenty-First Century
by Rodrigo Aguilera
Published 10 Mar 2020

That’s the spirit that made the American economy work.13 Figure 5.1 The post-war period was also more stable Notes: This chart shows the number of countries experiencing banking or external debt crises. Contrary to what the advocates of market liberalization would predict, the Bretton Woods system provided the most stable period in the history of capitalism and also its fastest growing. Source: Carmen M. Reinhart and Kenneth S. Rogoff (2009). What has changed since the crisis is the opposition to capitalism. Whether it comes in the form of grassroots movements like Occupy Wall Street, the rise of the populist left through figures like Bernie Sanders in the US or Jeremy Corbyn in Britain, or the anti-globalization backlash from the supporters of Brexit and Trump, there is a growing sense that the last four decades of Western history under liberal capitalism have been a disappointment.

An Extraordinary Time: The End of the Postwar Boom and the Return of the Ordinary Economy
by Marc Levinson
Published 31 Jul 2016

Kaminsky and Alfredo Pereira, “The Debt Crisis: Lessons of the 1980s for the 1990s,” Federal Reserve Board, international finance discussion paper 481, September 1994; FDIC, An Examination, 206. 10. For a history of the many instances in which governments defaulted on their foreign debts, see Carmen M. Reinhart and Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton, NJ: Princeton University Press, 2009), 68–118. 11. Federally chartered banks in the United States were prohibited by law from lending more than 10 percent of their capital to a single borrower, but their lead supervisor, the Comptroller of the Currency, allowed them to circumvent that law by deciding that a country’s national government was a separate borrower from a state-owned oil company or a state development bank.

The Ascent of Money: A Financial History of the World
by Niall Ferguson
Published 13 Nov 2007

Others estimated costs of a trillion dollars or more: Pontell and Calavita, ‘Savings and Loan Industry’, p. 203. 51 For a vivid account, see Michael Lewis, Liar’s Poker (London, 1989), pp. 78-124. 52 Bernanke, ‘Housing, Housing Finance, and Monetary Policy’. 53 I am grateful to Joseph Barillari for his assistance with these calculations. Morris A. Davisa, Andreas Lehnert and Robert F. Martin, ‘The Rent-Price Ratio for the Aggregate Stock of Owner-Occupied Housing’, Working paper (December 2007). 54 Shiller, ‘Recent Trends in House Prices’. 55 Carmen M. Reinhart and Kenneth S. Rogoff, ‘Is the 2007 Sub-Prime Financial Crisis So Different? An International Historical Comparison’, Draft Working Paper (14 January 2008). 56 Mark Whitehouse, ‘Debt Bomb: Inside the “Subprime” Mortgage Debacle’, Wall Street Journal, 30 May 2007, p. A1. 57 See Kimberly Blanton, ‘A “Smoking Gun” on Race, Subprime Loans’, Boston Globe, 16 March 2007. 58 ‘U.S.

The Euro: How a Common Currency Threatens the Future of Europe
by Joseph E. Stiglitz and Alex Hyde-White
Published 24 Oct 2016

article=1026&context=econ_faculty_pubs. 58 See, for example, International Monetary Fund, “Will It Hurt? Macroeconomic Effects of Fiscal Consolidation,” chapter 3 in 2010 World Economic Outlook. 59 Eurostat figures for the eurozone for March 2016. 60 See, for example, International Monetary Fund, “Will It Hurt?” 62 Carmen M. Reinhart and Kenneth S. Rogoff, “Growth in a Time of Debt,” American Economic Review 100, no. 2 (May 2010): 573–78. 62 By now, there is a large literature on the subject. See, for example, Thomas Herndon, Michael Ash, and Robert Pollin, “Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff,” Cambridge Journal of Economics 38, no. 2 (2014): 257–79; Ugo Panizza and Andrea F.

The Entrepreneurial State: Debunking Public vs. Private Sector Myths
by Mariana Mazzucato
Published 1 Jan 2011

Principles of Corporate Finance
by Richard A. Brealey , Stewart C. Myers and Franklin Allen
Published 15 Feb 2014

Economists refer to this imitative behavior as a cascade.13 It remains to be seen how far cascades or some alternative theory can help to explain financial fashions. 10. Why Are Financial Systems So Prone to Crisis? The crisis that started in 2007 was an unwelcome reminder of the fragility of financial systems. One moment everything seems to be going fine; the next moment markets crash, banks fail, and before long the economy is in recession. Carmen Reinhart and Kenneth Rogoff have documented the effects of banking crises in many countries.14 They find that systemic banking crises are typically preceded by credit booms and asset price bubbles. When the bubbles burst, housing prices drop on average by 35% and stock prices fall by 55%. Output falls by 9% over the following two years and unemployment rises by 7% over a period of four years.

Everything Is Obvious: *Once You Know the Answer
by Duncan J. Watts
Published 28 Mar 2011

The Road to Ruin: The Global Elites' Secret Plan for the Next Financial Crisis
by James Rickards
Published 15 Nov 2016

The Physics of Wall Street: A Brief History of Predicting the Unpredictable
by James Owen Weatherall
Published 2 Jan 2013

Slouching Towards Utopia: An Economic History of the Twentieth Century
by J. Bradford Delong
Published 6 Apr 2020

But those costs were trivial relative to the damage avoided by maintaining full employment and growth through what was, elsewhere, the Great Recession. During the Great Recession, China gained from five to ten extra years in its race to catch up to the global north. We can begin to theorize explanations for such irrationality. Some highly capable and competent economists, such as Carmen M. Reinhart and Kenneth Rogoff, saw the dangers of the financial crisis but greatly exaggerated the risks of public spending to boost employment in its aftermath.32 Other highly capable and competent economists, including Federal Reserve chair Bernanke, understood the importance of keeping interest rates low but overestimated the effectiveness of additional monetary-policy tools such as quantitative easing.33 Still others, perhaps less capable and competent, like me, understood that expansionary monetary policies would not be enough but, because we had looked at global imbalances the wrong way, missed the principal source of risk—US financial misregulation—and found ourselves still trying to catch up to the situation in order to give accurate policy advice in real time.34 In hindsight, technocrats’ errors of judgment and failures of communication seem to me a large part of how events unfolded so disastrously—if we economists had spoken up sooner about what we knew about depressions and their cure, had been more convincing on the issues where we were right, and had been better at recognizing where we were wrong, the situation today might be considerably better.

Termites of the State: Why Complexity Leads to Inequality
by Vito Tanzi
Published 28 Dec 2017

The Crisis of Crowding: Quant Copycats, Ugly Models, and the New Crash Normal
by Ludwig B. Chincarini
Published 29 Jul 2012