Boom and Bust: Financial Cycles and Human Prosperity

by Alex J. Pollock

Overview

While the recent economic crisis was a painful period for many Americans, the panic surrounding the downturn was fueled by an incomplete understanding of economic history. Economic hysteria made for riveting journalism and effective political theater, but the politicians and members of the media who declared that America was in the midst of the greatest financial calamity since the Great Depression were as wrong and misguided as the expansionists of the Roosevelt era. In reality the cyclical nature of market economies is as old as the markets themselves. In a free market system, financial downturns inevitably accompany economic prosperity-but the overall trend is upward progress in living standards and national wealth. While it is helpful to understand what caused the recent crisis, the more important questions to consider are 'What makes the 'boom and bust' cycle so predictable?' and 'What are the ethical responsibilities of the citizens of a free market economy?' In Boom and Bust: Financial Cycles and Human Prosperity, Alex J. Pollock argues that while economic downturns can be frightening and difficult, people living in free market economies enjoy greater health, better access to basic necessities, better education, work less arduous jobs, and have more choices and wider horizons than people at any other point in history. This wonderful reality would not exist in the absence of financial cycles. This book explains why.

Product Details

ISBN-13:	9780844743837
Publisher:	American Enterprise Institute for Public Policy Research
Publication date:	12/16/2010
Series:	Values and Capitalism
Pages:	116
Product dimensions:	4.40(w) x 6.60(h) x 0.50(d)

About the Author

Alex J. Pollock spent thirty-five years in the banking industry before becoming a resident scholar at the American Enterprise Institute, where he researches housing finance, government-sponsored enterprises, corporate governance, and the banking system. He is a director of the Chicago Mercantile Exchange and the International Housing Union for Housing Finance.

Table of Contents

Foreword Peter Greer ix

Chapter I Nothing New under the Financial Sun 01

Chapter II The Disturbing Experience of Watching Your Friends Get Rich 09

Chapter III All Too Human 15

The "Minsky Moment" 17

Chapter IV Panic 21

"Liquidity" and the Plank Curve 26

Chapter V Bubbles and Economics: Confounding Isaac Newton 31

Is Economics a Science? 34

Chapter VI Did They Really Believe House Prices Couldn't Go Down? 39

Chapter VII A $5 Trillion Government Failure 43

Expanding "Access" to Mortgages: Be Careful What You Wish For 45

The GSE "Risk Turkey" 46

Chapter VIII The Yin and Yang of Two Big Balance Sheets 49

The Price You Never Thought You'd Have to Pay 51

Everybody Can't Deleverage at Once 52

Bailouts 54

Bailout History Repeats 56

Taxpayers as Investors 57

Chapter IX The Golden Age of Government Regulation? 61

Sensible Improvements 64

Chapter X Taking Risks, Taking Responsibility 71

Clear and Straightforward Information 72

Chapter XI Can You Regulate Systemic Risk When You Are the Systemic Risk? 77

A Systemic Risk Regulator? 78

A Systemic Risk Advisor 81

About the Authors 85

Endnotes 86

Editorial Reviews

Provides some basics on financial cycles.

World Magazine

Alex J. Pollock isn't angry about the financial panic that erupted in 2008 and knocked the U.S. economy into the worst slump since the 1930s. Mr. Pollock, a resident fellow at the American Enterprise Institute and a former banker, isn't even looking for someone to blame. In Boom and Bust, he swiftly identifies the villain—a familiar, sometimes endearing and invariably roguish character known as human nature.

The Wall Street Journal

Alex J. Pollock isn't angry about the financial panic that erupted in 2008 and knocked the U.S. economy into the worst slump since the 1930s. Mr. Pollock, a resident fellow at the American Enterprise Institute and a former banker, isn't even looking for someone to blame. In Boom and Bust, he swiftly identifies the villain--a familiar, sometimes endearing and invariably roguish character known as human nature.--The Wall Street Journal

Provides some basics on financial cycles.--World Magazine

From the Publisher

Alex J. Pollock isn't angry about the financial panic that erupted in 2008 and knocked the U.S. economy into the worst slump since the 1930s. Mr. Pollock, a resident fellow at the American Enterprise Institute and a former banker, isn't even looking for someone to blame. In Boom and Bust, he swiftly identifies the villain—a familiar, sometimes endearing and invariably roguish character known as human nature.

Wall Street Journal