First published 2009
The 2008 financial crisis struck with unprecedented speed, creating the most serious economic threat in a generation. Richard Posner dissects this catastrophe without technical jargon, making complex economic forces accessible to general readers. He traces the disaster to multiple causes: excessive Asian savings flooding into America, the Federal Reserve's reckless interest rate cuts, executive pay structures that rewarded short-term gains over stability, aggressive mortgage marketing that inflated the housing bubble, Americans' low savings habits, and financial institutions operating with dangerously high leverage. Posner examines two competing approaches to recovery, drawing from lessons of the Great Depression. The monetarist view blames the Federal Reserve for allowing money supply to contract and deflation to take hold. The Keynesian perspective points to the 1920s credit boom, stock market collapse, and subsequent economic spiral. Posner argues that financial markets require stronger regulation, as the pendulum swung too far toward deregulation. This book offers readers a clear framework for understanding both the crisis origins and the stumbling government responses that followed.
Genres: political-science, economics, non-fiction, 21st-century, finance, academic
Vibes: analytical, informative, thought-provoking
Tropes: investigative-journalism, policy-analysis
Period: 2008
368 pages · Hardcover · Harvard University Press