Seven Crashes, page 42
16. “A Challenge to Free Trade,” New York Times, April 5, 1979.
17. Cambridge University Department of Applied Economics, Economic Policy Review 1976: 17.
18. “World Trade and Finance: Prospects for the 1980s,” Economic Policy Review 6, no. 3 (1980): 4.
19. Athanasios Orphanides, “Monetary Policy Rules Based on Real-Time Data,” American Economic Review 91, no. 4 (2001): 964 –985.
20. Allan H. Meltzer, A History of the Federal Reserve, vol. 2, part 2 (Chicago: University of Chicago Press, 2009), 857.
21. Harold James, International Monetary Cooperation since Bretton Woods (New York: Oxford University Press, 1996), 212.
22. See Beyer et al., “Opting Out.”
23. Jimmy Carter, “Crisis of Confidence” (televised speech, July 15, 1979), American Experience, https://www.pbs.org/wgbh/americanexperience/features/carter-crisis/.
24. “The Carter-Reagan Presidential Debate” (debate transcript, Cleveland, October 28, 1980), The Commission on Presidential Debates, https://www.debates.org/voter-education/debate-transcripts/october-28–1980-debate-transcript/.
25. Philip Rawstorne, “Callaghan ‘Will Not Be Rushed,’” Financial Times, January 11, 1979; John Shepherd, “Labour Wasn’t Working,” History Today 59, no. 1 (January 2009).
26. Peter Hennessy, The Prime Minister: The Office and Its Holders since 1945 (London: Penguin, 2000), 394.
27. “‘Tiny’ Rowland the Vulnerable Emperor,” New York Times, April 19, 1973.
28. Kristina Spohr, The Global Chancellor: Helmut Schmidt and the Reshaping of the International Order (Oxford: Oxford University Press, 2016), 13, 18.
29. “Wir sind ein erstklassiger Partner,” Spiegel, January 6, 1975.
30. “Bonn: Nach Carters Wahl ratlos,” Spiegel, November 7, 1976.
31. “Wir sind ein erstklassiger Partner,” Spiegel, January 6, 1975.
32. Paul Volcker, “The Triumph of Central Banking,” Per Jacobsson Lecture, September 23, 1990 (Washington, D.C.: International Monetary Fund, Per Jacobsson Foundation, 1990), 11.
33. Paul Volcker at Meeting of the Federal Open Market Committee, Washington, D.C., November 18, 1980, https://fraser.stlouisfed.org/files/docs/historical/FOMC/meetingdocuments/19801118meeting.pdf.
34. Paul Volcker at Meeting of the Federal Open Market Committee, Washington, D.C., December 18 –19, 1980, https://fraser.stlouisfed.org/files/docs/historical/FOMC/meetingdocuments/FOMC19801219meeting.pdf.
35. Julie Salmon, “Comex in Bid to Cool Silver Market,” Wall Street Journal, January 22, 1980.
36. “Silver Declines,” Wall Street Journal, January 23, 1980.
37. “Hunts Face Selling Off Much of Their Silver as Condition for Loans,” Wall Street Journal, May 1, 1980. On the disinflation, see Michael D. Bordo, Christopher Erceg, and Andrew Levin, “Three Great American Disinflations,” NBER Working Paper No. 12982, March 2007.
38. FOMC, “Meeting of the Federal Open Market Committee,” July 6 –7, 1981, transcript: https://fraser.stlouisfed.org/title/federal-open-market-committee-meeting-minutes-transcripts-documents-677/meeting-july-6–7–1981–23328/content/pdf/FOMC19810707meeting.
39. Meltzer, History of the Federal Reserve, 1107.
40. Ibid., 1234.
41. Marc Levinson, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger (Princeton: Princeton University Press, 2006).
42. OECD, “The Impact of Mega-Ships,” International Transport Forum Policy Papers 10 (Paris: OECD, 2015), 18.
43. Blake Z. Rong, “The First Japanese Car Sold in Britain Was a Piece of Junk,” Road and Track, April 2, 2016, https://www.roadandtrack.com/car-culture/classic-cars/news/a28691/the-first-japanese-car-sold-in-britain-was-a-piece-of-junk/.
44. “Judgment of Paris,” Time, June 7, 1976: 58.
45. Paul Krugman, Peddling Prosperity: Economic Sense and Nonsense in the Age of Diminished Expectations (New York: W. W. Norton, 1994), 171.
46. Thatcher rebuffing the “rational pessimist” conservative historian Maurice Cowling, quoted in Peter Ghosh, “Towards the Verdict of History,” in Public and Private Doctrine: Essays in British History Presented to Maurice Cowling, ed. Michael Bentley (New York: Cambridge University Press, 1993), 288.
47. Luís A. V. Catão and Maurice Obstfeld, “Introduction,” in Meeting Globalization’s Challenges: Policies to Make Trade Work for All, ed. Luís A. V. Catão and Maurice Obstfeld (Princeton: Princeton University Press, 2019).
48. James, International Monetary Cooperation, 321.
49. Jagdish Bhagwati, Protectionism (Cambridge, MA: MIT Press, 1988).
50. Ramesh Thakur, “Restoring India’s Economic Health,” Third World Quarterly 14, no. 1 (1993): 137.
51. Michael Dillon, Deng Xiaoping: The Man Who Made Modern China (London: I. B. Tauris, 2015), 237.
52. Ibid., 245.
53. Stefan Eich and Adam Tooze, “The Great Inflation,” in Anselm Doering-Manteuffel, Lutz Raphael, and Thomas Schlemmer, eds., Vorgeschichte der Gegenwart: Dimensionen des Strukturbruchs nach dem Boomn (Göttingen: Vandenhoeck & Ruprecht, 2016), 174; quoting Alexander Kluge’s collection of parables of modern life, Lernprozesse mit tödlichem Ausgang (Frankurt/Main: Suhrkamp, 1973).
54. John Maynard Keynes, The Economic Consequences of the Peace (London: Macmillan, 1919), 235 –236.
55. John Maynard Keynes, How to Pay for the War: A Radical Plan for the Chancellor of the Exchequer (New York: Harcourt, Brace, 1940).
56. Roy F. Harrod, The Life of John Maynard Keynes (Harmondsworth: Penguin, 1972 [1951]), 373 –374.
57. Paul Krugman, “Who Was Milton Friedman?” New York Review of Books, February 15, 2007.
58. Perry Anderson, “The Intransigent Right at the End of the Century,” London Review of Books 14, no. 18 (1992).
59. Charles Moore, Margaret Thatcher: The Authorized Biography, vol. 1: From Grantham to the Falklands (New York: Alfred A. Knopf, 2013), 342.
60. Edward Nelson, Milton Friedman and Economic Debate in the United States, 1932–1972, vol. 1 (Chicago: University of Chicago Press, 2020), 19.
61. Milton Friedman and Anna J. Schwartz, A Monetary History of the United States, 1867–1960 (Princeton: Princeton University Press, 1963); see also Milton Friedman and Anna J. Schwartz, “The Failure of the Bank of the United States: A Reappraisal: A Reply,” Explorations in Economic History 23, no. 2 (April 1986): 199–204; Joseph Lucia, “The Failure of the Bank of the United States: A Reappraisal,” Explorations in Economic History 22, no. 4 (October 1985): 402–416; and Anthony Patrick O’Brien and Paul B. Trescott, “The Failure of the Bank of the United States, 1930,” Journal of Money, Credit and Banking 24, no. 3 (August 1992): 384 –399.
62. Friedrich A. von Hayek, Business Cycles, ed. Hansjoerg Klausinger, vol. 8 of Hayek Works (Chicago: University of Chicago Press, 2012), 143, 149, 154 (“The Purchasing Power of the Consumer and the Depression”).
63. Ibid., 205 (“Capital and Industrial Fluctuations: A Reply to Criticism”).
64. Friedrich A. von Hayek, Prices and Production (London: Macmillan, 1932), 100, 66.
65. Hayek, Business Cycles, 155.
66. Skidelsky, Keynes, 2: 456.
67. Edward Nelson, Milton Friedman and Economic Debate in the United States, 1932–1972 (Chicago: University of Chicago Press, 2020), 1: 398 –399.
68. PBS interview, October 1, 2000, https://www.pbs.org/wgbh/commandingheights/shared/minitext/int_miltonfriedman.html#3.
69. Milton Friedman, “Why Some Prices Should Rise,” Newsweek 82, no. 21 (1973): 130.
70. Milton Friedman, “Feo and the Gas Lines,” Newsweek 83, no. 9 (1974): 71.
71. Milton Friedman, “The Methodology of Positive Economics,” in Essays in Positive Economics (Chicago: University of Chicago Press, 1966), 4.
72. Ibid., 8.
73. Ibid., 15.
74. Friedrich A. von Hayek, The Counter-Revolution of Science: Studies on the Abuse of Reason (Glencoe: Free Press, 1952), 31.
75. N. Gregory Mankiw and Ricardo Reis, “Friedman’s Presidential Address in the Evolution of Macroeconomic Thought,” Journal of Economic Perspectives 32, no. 1 (2018): 83.
76. Milton Friedman, “The Role of Monetary Policy,” American Economic Review 58, no. 1 (1968): 7–8.
77. Friedman, “Monetary Policy,” 8.
78. Ibid., 14.
79. For instance Paul A. Samuelson and Robert M. Solow, “Analytical Aspects of Anti-Inflation Policy,” American Economic Review 50, no. 2 (1960): 177–194.
80. Edmund S. Phelps, “Phillips Curves, Expectations of Inflation and Optimal Unemployment over Time,” Economica 34, no. 135 (1967): 254 –281.
81. Friedman, “Monetary Policy,” 14 –15.
82. Ibid., 16.
83. Martin Eichenbaum, “Some Thoughts on Practical Stabilization Policy,” American Economic Review 87, no. 2 (1997): 236.
84. Nelson, Milton Friedman, 2: 139.
85. See Harold James, Making a Modern Central Bank: The Bank of England, 1979–2003 (Cambridge: Cambridge University Press, 2020).
86. Michael D. Bordo, “The Contribution of a Monetary History of the United States: 1867 to 1960 to Monetary History,” in Money, History and International Finance: Essays in Honor of Anna J. Schwartz, ed. Michael D. Bordo (Chicago: University of Chicago Press for the NBER, 1989), 51.
87. David Laidler and Michael Parkin, “The Demand for Money in the United Kingdom, 1956 –1967: Preliminary Estimates,” Manchester School 38, no. 2 (1970): 187–208.
88. See David Laidler, “Monetarism: An Interpretation and an Assessment,” Economic Journal 91, no. 361 (March 1981): 1–28; see also Graham Hacche, “Demand for Money,” Bank of England Quarterly Bulletin 14, no. 3 (1974): 284 –305.
89. David F. Hendry and Neil R. Ericsson, “An Econometric Analysis of UK Money Demand in Monetary Trends in the United States and the United Kingdom by Milton Friedman and Anna J. Schwartz,” American Economic Review 81, no. 1 (1991): 8 –38.
90. Milton Friedman, “Wesley C. Mitchell as an Economic Theorist,” Journal of Political Economy 58, no. 6 (1950): 465 –493; see also J. Daniel Hammond, Theory and Measurement: Causality Issues in Milton Friedman’s Monetary Economics (New York: Cambridge University Press, 1996); and Mary O’Sullivan, History as Heresy: Unlearning the Lessons of Economic Orthodoxy (Geneva: Paul Bairoch Institute of Economic History, 2021).
91. Milton Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962), 38. The critique is in O’Sullivan, History as Heresy, 14.
92. O’Sullivan, History as Heresy, 15.
93. Krugman, “Who Was Milton Friedman?”
94. Milton Friedman, “The Counter-Revolution in Monetary Theory,” IEA Occasional Paper No. 33, January 1970.
95. F. A. Hayek, The Constitution of Liberty (Chicago: University of Chicago Press, 1960), 332.
96. F. A. Hayek, Prices and Production (London: G. Routledge & Sons, 1935), 87.
97. Ibid., 7.
98. Hayek, Constitution, 400.
99. Ibid., 281.
100. Ibid., 281–282.
101. F. A. Hayek, Law, Legislation, and Liberty: A New Statement of the Liberal Principles of Justice and Political Economy, vol. 1 (London: Routledge, 1973), 36.
102. Hayek, “Economics and Knowledge,” Economica 4, no. 13 (February 1937): 33.
103. Hayek, Constitution, 11.
104. Ibid., 22.
105. Hayek, Counter-Revolution, 94 –95.
106. Hayek, Prices and Production, 3 –5.
107. F. A. Hayek, Law, Legislation, and Liberty, vol. 2 (Chicago: University of Chicago Press, 1978), 108 –109.
108. Hayek, Constitution, 324 –325.
109. Ibid., 335.
110. F. A. Hayek, Tiger by the Tail: The Keynesian Legacy of Inflation (Washington, D.C.: Cato Institute, 1979), 98.
111. Milton Viorst, “Friedmanism, n. Doctrine of most audacious U.S. economist; esp., theory ‘only money matters,’” New York Times, January 25, 1970.
112. Interview with Brian Lamb, C-SPAN, October 24, 1994, https://www.c-span.org/video/?61272–1/milton-friedman-road-serfdom.
113. William L. Silber, Volcker: The Triumph of Persistence (New York: Bloomsbury, 2012), 201.
114. Eichenbaum, “Stabilization,” 236.
115. Robert Mundell, “The Debt Crisis: Causes and Solutions,” Wall Street Journal, January 31, 1981.
6. The Great Recession
1. Robert E. Lucas, Jr., “Macroeconomic Priorities,” American Economic Review 93, no. 1 (2003): 1; Paul Krugman, “Fighting Off Depression,” New York Times, January 5, 2009.
2. Mervyn King, speech at the University of Exeter, January 19, 2010, https://www.bankofengland.co.uk/-/media/boe/files/speech/2010/mervyn-king-speech-at-the-university-of-exeter.pdf.
3. Òscar Jordà, Moritz Schularick, and Alan M. Taylor, “Betting the House,” Journal of International Economics 96, no. 1 (2015): S2–S18.
4. Markus K. Brunnermeier and Isabel Schnabel, “Bubbles and Central Banks: Historical Perspectives,” in Central Banks at a Crossroads: What Can We Learn from History? ed. Michael D. Bordo, Øyvind Eitrheim, Marc Flandreau, and Jan F. Qvigstad (Cambridge: Cambridge University Press, 2016); see also Dilip Abreu and Markus K. Brunnermeier, “Bubbles and Crashes,” Econometrica 71, no. 1 (2003): 173 –204.
5. David H. Autor, David Dorn, and Gordon H. Hanson, “The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade,” Annual Review of Economics 8, no. 1 (2016): 205 –240.
6. Rupert Cornwell, “Massive Deficit Looms as America Ages,” Independent, October 3, 2013; see also John Cassidy, “Bushonomics Comment,” New Yorker 79, no. 11 (2003): 37–38.
7. King, speech at the University of Exeter.
8. Lawrence G. McDonald with Patrick Robinson, A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers (New York: Random House, 2009), 198, 223.
9. Simon Goodley, “Goldman Sachs ‘Muppet’ Trader Says Unsophisticated Clients Targeted,” Guardian, October 22, 2012.
10. See Hyun Song Shin, “Global Banking Glut and Loan Risk Premium,” paper presented at the 12th Jacques Polak Annual Research Conference, International Monetary Fund, Washington, D.C., November 10 –11, 2011; Tamim Bayoumi, Unfinished Business: The Unexplored Causes of the Financial Crisis and the Lessons Yet to Be Learned (New Haven: Yale University Press, 2018); J. Adam Tooze, Crashed: How a Decade of Financial Crises Changed the World (New York: Viking, 2018).
11. International Monetary Fund, World Economic Outlook, October 2018, “A Long and Difficult Ascent” (chap. 2).
12. Ibid., 73 –74.
13. Chris Giles, “China Poised to Pass US as World’s Leading Economic Power This Year,” Financial Times, April 24, 2014.
14. See Raghuram G. Rajan, Fault Lines: How Hidden Fractures Still Threaten the World Economy (Princeton: Princeton University Press, 2011).
15. See Alan Blinder, After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead (New York: Penguin, 2013), 187–203.
16. Luc Laeven and Fabian Valencia, “Resolution of Banking Crises: The Good, the Bad, and the Ugly,” IMF Working Papers 10.146, 2010; Timotej Homar and Sweder J. G. van Wijnbergen, “Bank Recapitalization and Economic Recovery after Financial Crises,” Journal of Financial Intermediation 32 (2017): 16 –28.
17. 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).
18. See Manuel Adelino, Antoinette Schoar, and Felipe Severino, “Dynamics of Housing Debt in the Recent Boom and Great Recession,” NBER Macroeconomics Annual 32, no. 1 (2018): 265 –311.
19. Lawrence Summers, “Risks of Recession, Prospects for Policy,” remarks at the Brookings Institution: State of the U.S. Economy, Washington, D.C., December 19, 2007.
20. Hank Paulson, press briefing, Washington, D.C., January 18, 2008, https://georgewbush-whitehouse.archives.gov/news/releases/2008/01/text/20080118–6.html.
21. Noam Scheiber, “The Memo That Larry Summers Didn’t Want Obama to See,” New Republic, February 22, 2012; see also Noam Scheiber, The Escape Artists: How Obama’s Team Fumbled the Recovery (New York: Simon & Schuster, 2012).
22. Ewen MacAskill, “Obama Signs $787bn Bill, and It May Not Be Last,” Guardian, February 17, 2009.
23. Ibid.
24. Alex Thompson and Theodoric Meyer, “Democrats Trash Obama’s Stimulus to Sell Biden’s,” Politico, March 11, 2021.
25. International Monetary Fund, World Economic Outlook, April 2009, xix.
26. John H. Allan, “Rates Haven’t Hit Bottom Yet,” Bond Buyer, March 1, 1993.
27. Jennifer Ablan, “Analysis: U.S. 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. Jim Lehrer, Kwame Holman, Jeffrey Brown, Spencer Michels, Margaret Warner, and Betty Ann Bowser, “House Passes Economic Stimulus Package Off to Senate,” NewsHour with Jim Lehrer, PBS, January 29, 2009.
35. Gerald F. Seib, “Tea-Party Call to Cut Spending Gains Traction,” Wall Street Journal Online, July 2, 2010.
36. Jason Furman, “The Fiscal Response to the Great Recession: Steps Taken, Paths Rejected, and Lessons for Next Time,” Brookings Preliminary Discussion Draft, September 2018, 20.
37. Rahm Emanuel, “Not Every ‘Serious Crisis’ Is Alike,” Wall Street Journal, April 18, 2021.
38. Ben McGrath, “The Movement: The Rise of Tea Party Activism,” New Yorker, February 1, 2010, https://www.newyorker.com/magazine/2010/02/01/the-movement; see also Neil Fligstein, The Banks Did It: An Anatomy of the Financial Crisis (Cambridge, MA: Harvard University Press, 2021).
