Graeber's book Debt: The First 5000 Years documents that cycles of debt crisis and subsequent forgiveness is historically normal. And probably necessary. I mean, think about it: What other remedies do we have to winner-takes-all? Progressive taxation? Government largess?<p>Made me rethink all the bailouts, etc. Especially with the renewed scholarship on Keynesian 2.0 (MMT).<p>I'd probably be ok with bailouts, jubilees if they were more fair, more bottom up.<p>Financiers gobbling up all the cheddar, abandoning all their victim's, really pisses me off.<p>Insult to injury is lack of consequences, acting aggrieved when their malfeasance is examined. Just one example being Jamie Dimon clutching his pearls when Obama Admin merely suggesting the optics of huge bonuses for execs during a meltdown was a bad look.
The authors compiled data for 1886 interventions in 20 categories across 138 countries going back to the 13th century. Fabulous work. Looking forward to reading it.<p>In the meantime, please do yourself a favor and take a look at Figure 6 on page 31, which shows that the number of interventions to rescue financial institutions around the world <i>has been increasing consistently since the 1600's</i>.<p>As the authors put it in their abstract, "intervention frequencies and sizes suggest that the crisis problem in the financial sector has indeed <i>reached an apex during the post-Bretton Woods era</i> – but that such trends are part of a more deeply entrenched development that saw global intervention frequencies and sizes gradually rise since at least the late 17th century."<p>And it's not only the frequencies and sizes of interventions that have increased, but also their <i>scope</i>. From the abstract: "The data shows a gradual shift over the past centuries from the traditional interventions of a lender-of-last-resort, suspensions of convertibility, and bank holidays, towards a much more prominent role for capital injections and sweeping guarantees of bank liabilities."<p>In short, over the course of at least five centuries, the financial system has grown more and more dependent on governmental support.
One of the co-authors, Paul Schmelzing, published a paper on how interest rates have been on a general downward trend for a few centuries:<p>* <a href="https://www.bankofengland.co.uk/working-paper/2020/eight-centuries-of-global-real-interest-rates-r-g-and-the-suprasecular-decline-1311-2018" rel="nofollow">https://www.bankofengland.co.uk/working-paper/2020/eight-cen...</a><p>Interviewed recently on the <i>Finance & History</i> podcast:<p>* <a href="https://twitter.com/FinanceHistory1/status/1435170755432624130" rel="nofollow">https://twitter.com/FinanceHistory1/status/14351707554326241...</a><p>* <a href="https://anchor.fm/carmen-hofmann/episodes/Interest-Rates-e16rp9u" rel="nofollow">https://anchor.fm/carmen-hofmann/episodes/Interest-Rates-e16...</a><p>His hypothesis (23m) is that capital stock is fairly long lasting, so except for (mostly) wars and revolutions (and plagues), there isn't much demand: people want to rebuild after disasters, and so demand for capital goes up. When things are quiet then there's more just sloshing around with not much to do.<p>The oil shock of 1970s, which caused the most recent spike in the last 40 years (which is tapering), was a fairly unique event for rates.
"The Bank "never goes broke." If the Bank runs out of money, the Banker may issue as much as needed by writing on any ordinary paper. (in the direction of the arrow) the number of spaces indicated by the dice. After you have completed your play, the turn passes to the left."<p>Monopoly - <a href="http://richard_wilding.tripod.com/monorules.htm#:~:text=The%20Bank%20%22never%20goes%20broke,writing%20on%20any%20ordinary%20paper.&text=(in%20the%20direction%20of%20the,turn%20passes%20to%20the%20left" rel="nofollow">http://richard_wilding.tripod.com/monorules.htm#:~:text=The%...</a>.
From the movie Margin Call:<p>"So you think we might have put a few people out of business today. That its all for naught. You've been doing that everyday for almost forty years Sam. And if this is all for naught then so is everything out there. Its just money; its made up. Pieces of paper with pictures on it so we don't have to kill each other just to get something to eat. It's not wrong. And it's certainly no different today than its ever been. 1637, 1797, 1819, 37, 57, 84, 1901, 07, 29, 1937, 1974, 1987-Jesus, didn't that fuck up me up good-92, 97, 2000 and whatever we want to call this. It's all just the same thing over and over; we can't help ourselves. And you and I can't control it, or stop it, or even slow it. Or even ever-so-slightly alter it. We just react. And we make a lot money if we get it right. And we get left by the side of the side of the road if we get it wrong. And there have always been and there always will be the same percentage of winners and losers. Happy foxes and sad sacks. Fat cats and starving dogs in this world. Yeah, there may be more of us today than there's ever been. But the percentages-they stay exactly the same. "
From the conclusion:<p>> In the historical record, crises are like fires and the government interventions in those crises are firefighting. ...<p>There's a brilliant quote from James Grant to the effect that the US Federal Reserve acts as both firefighter and arsonist:<p><a href="https://www.bloomberg.com/news/videos/2015-08-27/fed-s-functional-mandate-is-arsonist-and-fireman-grant" rel="nofollow">https://www.bloomberg.com/news/videos/2015-08-27/fed-s-funct...</a><p>It's not clear that the paper even considers this perspective. Instead it seems to take the position that banking crises naturally evolve, rather than get spawned by policy missteps to correct the previous crisis.
Crashed by Adam Tooze is really good reading on this topic:<p><a href="https://adamtooze.com/crashed/" rel="nofollow">https://adamtooze.com/crashed/</a><p><a href="https://www.amazon.com/Crashed-Decade-Financial-Crises-Changed/dp/0670024937" rel="nofollow">https://www.amazon.com/Crashed-Decade-Financial-Crises-Chang...</a>
That dip centred around 1954 in figure 6 is one of the clearest examples of just how exceptional the experience of the boomer generation is compared to all the rest of human history.
British baron, industrialist and prominent banker Josiah Stamp... <a href="https://en.m.wikipedia.org/wiki/Josiah_Stamp,_1st_Baron_Stamp" rel="nofollow">https://en.m.wikipedia.org/wiki/Josiah_Stamp,_1st_Baron_Stam...</a><p>A quote attributed to Stamp is:<p>"Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take away from them the power to create money and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money."