This Time Is Different audiobook cover - Eight Centuries of Financial Folly

This Time Is Different

Eight Centuries of Financial Folly

Carmen M. Reinhart, Kenneth S. Rogoff

★ 4.0 / 5(3 ratings)
Start ListeningDownload App
Categories:
Money & InvestmentsHistoryEconomics

If You're Curious About These Questions...

You should listen to this audiobook

Listen to This Time Is Different — Free Audiobook

Loading player...

Key Takeaways from This Time Is Different

Learning Tools

Reinforce what you learned from This Time Is Different

Mind Map

This Time Is Different
The Core Illusion+
Sovereign External Debt Crises+
Domestic Debt Crises+
Banking Crises+
Inflation & Currency Crises+
The 2008 Financial Crisis+

Quiz — Test Your Understanding

Question 1 of 6
According to the book, what is the most expensive recurring error in financial history?
  • A. The failure to strictly regulate complex financial instruments like mortgage-backed securities.
  • B. The belief that current economic systems and innovations have outgrown the fundamental patterns of past financial crises.
  • C. The tendency of governments to rely exclusively on foreign capital instead of building robust domestic savings.
  • D. The assumption that central banks can permanently prevent inflation through high interest rates.
Question 2 of 6
How did Newfoundland handle its severe sovereign debt crisis during the Great Depression in the 1930s?
  • A. It issued Brady bonds to restructure its debt using British securities as collateral.
  • B. It intentionally triggered hyperinflation to wipe out the value of its domestic obligations.
  • C. It accepted the suspension of its self-governing status and reverted to direct British control.
  • D. It defaulted on its obligations, leading to the collapse of major Canadian banking institutions.
Question 3 of 6
What critical mistake did countries like Mexico (with Tesobonos) and Brazil make when managing their domestic debt?
  • A. They linked their domestic bonds to foreign exchange rates, effectively turning them into dangerous external obligations.
  • B. They forced their citizens to invest all their savings in government bonds with legally capped interest rates.
  • C. They relied entirely on printing new money to pay off the bonds, immediately triggering hyperinflation.
  • D. They sold their domestic debt exclusively to foreign banks, losing control over their own national interest rates.
Question 4 of 6
According to the text, what fundamental mechanism makes 'true' banking crises possible even for perfectly solvent banks?
  • A. The practice of domestic dollarization, which rapidly drains local currency reserves.
  • B. Maturity transformation, where banks convert short-term deposits into long-term loans.
  • C. The government's ability to arbitrarily cap interest rates below the rate of inflation.
  • D. The reliance on foreign capital inflows to artificially inflate local real estate prices.
Question 5 of 6
What phenomenon often occurs when citizens lose confidence in their local currency due to severe inflation or a currency crash?
  • A. Deleveraging, where citizens rapidly pay down all their outstanding domestic debt.
  • B. Disinflation, where the central bank forces prices to drop to historical averages.
  • C. Domestic dollarization, where citizens abandon local currency to save and transact in a more stable foreign currency.
  • D. Maturity transformation, where citizens convert their cash savings into long-term government bonds.
Question 6 of 6
What was the primary flawed assumption underlying the subprime mortgage market that led to the 2008 global financial crisis?
  • A. That international trade surpluses would continually provide enough capital to fund the mortgages.
  • B. That borrowers with poor credit histories would suddenly experience rapid income growth.
  • C. That government regulators would always step in to bail out failing financial institutions.
  • D. That housing prices would perpetually rise, allowing defaulted homes to be sold at a profit.

This Time Is Different — Full Chapter Overview

This Time Is Different Summary & Overview

This Time is Different (2011) analyzes eight centuries of financial crises, demonstrating that despite claims of uniqueness, these crises follow remarkably similar patterns. While countries eventually recover from financial storms, human nature's tendency to believe "this time is different" leads to repeated cycles of crisis, as each generation forgets or ignores the lessons of the past.

Who Should Listen to This Time Is Different?

  • Policy makers looking to avoid future economic missteps 
  • Finance workers who want to spot signs of impending crises
  • History lovers ready for a deep dive into economic history

About the Author: Carmen M. Reinhart, Kenneth S. Rogoff

Carmen Reinhart is Professor of International Financial Systems at Harvard Kennedy School and previously served as Chief Economist at the World Bank. Kenneth Rogoff is Professor of Economics and Public Policy at Harvard University and former Chief Economist at the International Monetary Fund.

🎧
Listen in the AppOffline playback & background play
Get App