Financial crises usually come as a shock. A shock to the economic system and a shock to the public. That financial crises also shock economists and policy makers is shocking as well. Carmen Reinhart chalks this up to an enormous blindness and delusion - a conviction that "it won't happen to us" because "this time is different." Carmen Reinhart and Kenneth Rogoff wrote This Time is Different: Eight Centuries of Financial Folly to counter this delusion. In a book that is at once elegantly written in a sharp, understated prose and massively documented, Reinhart and Rogoff puncture this delusion - but with little hope that they puncture it for good.
Carmen Reinhart came to Reiter's Books on Tuesday evening, December 1, to talk about the book. The discussion ranged over economic history, human psychology, and monetary policy. It was an evening of irony. Crystalline explanations collided with fearful predictions. The data assembled and
graphed in the book are startlingly clear. Yet the hope that this financial crisis will shock us into action to prevent future crises is dim.
This is a book for economists and for the rest of us. The book pays off a quick read. It also deserves repeated reading and reference to mine the depth of data pulled together and reconfigured for the book's argument.
Carmen Reinhart nudges us on. The brief and intense discussion last evening is, we can hope, the prelude to a deep and far-ranging public discussion. Carmen Reinhart deserves a big stage.