British historian Niall Ferguson has achieved the academic holy trinity, holding positions at Harvard, Oxford, and Stanford’s Hoover Institution. Only 44 years old, he has 9 books to his credit (including a new one: The Ascent of Money: A Financial History of the World), and you’ll often find him writing in the public press. In the latest edition of Vanity Fair, Ferguson takes a good look at the demise of the global financial system and locates the crisis “in the long run of financial history.” The story he tells is how the 20th century — and particularly America’s urge to become a “property-owning democracy” — brought us into “The Age of Leverage,” which carried with it a “deluge of paper money, asset-price inflation, [an] explosion of consumer and bank debt, and the hypertrophic growth of derivatives.” The Leverage Age is now over. But will its collapse have economic and social effects as disastrous as the Great Depression? Or will government action pull us back from the brink? Definitely give this piece a read, and thanks to “Hanoch” for making us aware of it. As always, it’s great to get reader suggestions.
As a related aside, I should direct your attention to a new article by Michael Lewis, who first wrote about Wall Street’s excesses in Liar’s Poker. It’s called “The End,” and it offers an inside account of how Wall Street sowed the seeds of its own destruction. It’s also apparently the basis for a new book.
Finally, you may want to check out a fascinating piece in the Wall Street Journal called “Memories of the 1930s Still Sear.” It features interviews with the older generation who endured the Depression, how they coped, and what lessons they learned.