This Time Is Different: Eight Centuries of Financial Folly
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- Create Date：2022-05-26 06:54:43
- Update Date：2025-09-13
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- Author：Carmen M. Reinhart
- ISBN：0691152640
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Summary
A comprehensive look at international financial crises that puts more recent economic meltdowns into perspective
Throughout history， rich and poor countries alike have been lending， borrowing， crashing--and recovering--their way through an extraordinary range of financial crises。 Each time， the experts have chimed， this time is different--claiming that the old rules of valuation no longer apply and that the new situation bears little similarity to past disasters。 With this breakthrough study， leading economists Carmen Reinhart and Kenneth Rogoff definitively prove them wrong。 Covering sixty-six countries across five continents， This Time Is Different presents a comprehensive look at the varieties of financial crises， and guides us through eight astonishing centuries of government defaults， banking panics， and inflationary spikes--from medieval currency debasements to today's subprime catastrophe。 Carmen Reinhart and Kenneth Rogoff， leading economists whose work has been influential in the policy debate concerning the current financial crisis， provocatively argue that financial combustions are universal rites of passage for emerging and established market nations。 The authors draw important lessons from history to show us how much--or how little--we have learned。
Using clear， sharp analysis and comprehensive data， Reinhart and Rogoff document that financial fallouts occur in clusters and strike with surprisingly consistent frequency， duration， and ferocity。 They examine the patterns of currency crashes， high and hyperinflation， and government defaults on international and domestic debts--as well as the cycles in housing and equity prices， capital flows， unemployment， and government revenues around these crises。 While countries do weather their financial storms， Reinhart and Rogoff prove that short memories make it all too easy for crises to recur。
An important book that will affect policy discussions for a long time to come， This Time Is Different exposes centuries of financial missteps。
Throughout history， rich and poor countries alike have been lending， borrowing， crashing--and recovering--their way through an extraordinary range of financial crises。 Each time， the experts have chimed， this time is different--claiming that the old rules of valuation no longer apply and that the new situation bears little similarity to past disasters。 With this breakthrough study， leading economists Carmen Reinhart and Kenneth Rogoff definitively prove them wrong。 Covering sixty-six countries across five continents， This Time Is Different presents a comprehensive look at the varieties of financial crises， and guides us through eight astonishing centuries of government defaults， banking panics， and inflationary spikes--from medieval currency debasements to today's subprime catastrophe。 Carmen Reinhart and Kenneth Rogoff， leading economists whose work has been influential in the policy debate concerning the current financial crisis， provocatively argue that financial combustions are universal rites of passage for emerging and established market nations。 The authors draw important lessons from history to show us how much--or how little--we have learned。
Using clear， sharp analysis and comprehensive data， Reinhart and Rogoff document that financial fallouts occur in clusters and strike with surprisingly consistent frequency， duration， and ferocity。 They examine the patterns of currency crashes， high and hyperinflation， and government defaults on international and domestic debts--as well as the cycles in housing and equity prices， capital flows， unemployment， and government revenues around these crises。 While countries do weather their financial storms， Reinhart and Rogoff prove that short memories make it all too easy for crises to recur。
An important book that will affect policy discussions for a long time to come， This Time Is Different exposes centuries of financial missteps。
Reviews
Eugene Kernes
，
Overview:Before a financial crisis， there is often a perception that this time is different。 A belief that crises are a part of the past， or only other places suffer them。 This happens to be a very costly piece of investment advice。 The claim partly stems from improved evaluation techniques， that previous rules of valuation are not applicable， which is heavily backed up by rigorous analysis。 Along with thinking that the lessons from prior failures have been learned， and that the boom being exper Overview:Before a financial crisis， there is often a perception that this time is different。 A belief that crises are a part of the past， or only other places suffer them。 This happens to be a very costly piece of investment advice。 The claim partly stems from improved evaluation techniques， that previous rules of valuation are not applicable， which is heavily backed up by rigorous analysis。 Along with thinking that the lessons from prior failures have been learned， and that the boom being experienced has appropriate fundamentals and is built on good policy。 This is one similar feature that occurs before a crisis。 Another similar feature between various crises is excessive debt accumulation。 Each crisis might appear different， but they have many similar features。 Understanding these similar features， means being able to reduce the risk of future crisis and to better handle each crisis。 The authors utilize various quantitative methods to show the general trends within crises。Financial crises have been around since the development of money and financial markets。 Highly indebted institutions， whether public or private， can keep credit rolling until confidence in them has collapsed， and lenders disappear， creating a crisis。 During a crisis， investors withdraw from risk taking generally， rather than specific sources。 Even countries face that problem as their credit can be taken away if other countries with similar issues are having problems。 Fickle expectations that destabilize banks， also apply to governments especially when they are borrowing external debt。 It is normal for emerging markets to have sovereign external debt defaults。 Development of their social， political， and economic aspects into becoming an advanced market can take a while， but will graduate away from defaults。 Governments have found ways to rid themselves of serial default on sovereign debt or very high inflation。 But serial banking crisis still remain。Normal function of a bank is to borrow short term， and lend long term。 A crisis can occur if they cannot fund their short-term obligation， with the illiquid long-term assets。 Some governments borrow with short term maturities because of the benefit of lower interest rate。 The problem of relying on short term borrowing is that confidence can change， and remove a source of funding。 Although there are similarities between private and public financial crisis， there are differences as well。 Governments do not default in the same manner that private institutions do。 Governments do not cease to exist with a default， and defaulting requires more considerations than economic and financial cost-benefit analysis as social and political factors needs to be considered。 Private institutions and individuals have clearly defined rights， such as assets being taken over when undergoing bankruptcy。 Creditors do not necessarily have that option with governments， even if on paper they do。 For sovereign nations， it is not just ability to repay debt that matters， but also willingness。 Caveats？This is primarily a quantitate account of crises。 Looking at statistical trends rather than detailed descriptions of various crisis。 There are very brief descriptions of various crises。 The general explanations of various aspects of a crisis are short， and might need more research to understand the problems。 A basic understanding of finance and statistics would help in reading the book。As the book looks at trends in data， what the authors recognize is the need for better data。 Much of the data was hard to obtain， contains suspect data， and lot of missing data。 Improving the quality of the data， can improve an understanding of particular trends within the data。 。。。more
Sangam Agarwal
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lost of history in this book 。 story of inflation and government defaults
Kristen
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A good history of financial follies， even if later examination did question some of the thesis。
Alex Lee
，
This book is an interesting assertion -- that there are fundamental relationships in finance that cannot be ignored。 These relationships play a deep role in the nature of the economy for nations for decades。 These relationships also play a deep role in the formation of policy for a nation seeking to manage its debt。 While the authors do not make this assumption， if we look at governmental policy， as far as something as in depth as finance is concerned， as a tool of the elite （wealthy， powerful） This book is an interesting assertion -- that there are fundamental relationships in finance that cannot be ignored。 These relationships play a deep role in the nature of the economy for nations for decades。 These relationships also play a deep role in the formation of policy for a nation seeking to manage its debt。 While the authors do not make this assumption， if we look at governmental policy， as far as something as in depth as finance is concerned， as a tool of the elite （wealthy， powerful） then it becomes clear that the government's use of debt is often to benefit all （in the economy， directly or indirectly） but the cost of such a debt is to fall on those with the least amount of power and influence。 The authors go pretty far at pulling out what sparse historic data there is -- and they make the argument that the 2008 crash was really predictable， although the details of the prediction （when the crash will happen or what indicators are accurate） is up in the air， as financial relationships can change and morph from period to period。 It seems then， that we are headed for another need to debt restructure as historically it appears governments will go through these collapses now and again as they need to restructure debt because they are addicted to borrowing and leveraging。This book isn't about predicting the future -- because the authors don't make predictions。 This book also isn't about maintaining a rigid dashboard of indicators。 Rather， they are looking at history in order to try and dispel the current illusions that people still spout， because they believe they have solved the problems of the past。 By saying "this time is different" leaders want the license to do as they will without needing to respond to criticisms。 。。。more
Hjalmar Vinje
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My professor wrote this， so I'm afraid to give it anything other than 5 stars。 My professor wrote this， so I'm afraid to give it anything other than 5 stars。 。。。more
Nathan Mukoma
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Definitely an interesting read， wish i only found out about the data controversies and all at the end。 Regardless， this remains a really good voyage into the world of macro-economics， business cycle but most of all financial crisis。 Still learned quite a lot regarding those inter-twining relationships。
FAHAD AHSAN
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Brillaint for Financial Histoy and Insight into Future
Walter Cavinaw
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I finally got around to reading this。 People in the industry talk down about it because of the calculation errors they made in Excel， but overall this has some useful info。The authors examine the global incidence of 4 types of crises over a 200 year span。 It covers external default， domestic default， periods of high inflation， and currency crashes。 It gives a great overview of where and when crisis have happened。 While I knew about the existence of many of the crises mentioned， there were many I I finally got around to reading this。 People in the industry talk down about it because of the calculation errors they made in Excel， but overall this has some useful info。The authors examine the global incidence of 4 types of crises over a 200 year span。 It covers external default， domestic default， periods of high inflation， and currency crashes。 It gives a great overview of where and when crisis have happened。 While I knew about the existence of many of the crises mentioned， there were many I didn't know about。 These incidences also tended to cluster in time。 There was also a bit of discussion on the policy and macroeconomic context at the time of crisis （financial repression vs financial liberalization， commodity booms and busts， wars， etc）。 The charts and data throughout the book are really good， especially in part 1。 I will revisit it again in the future。The chapter on domestic default was interesting because that type of crises is not discussed nearly as frequently as the other three。 They created their own dataset of domestic debt and default events but I disagree with their classification method。 Interest rate changes， debt restructuring and currency replacements （after hyperinflation） are clearly cases of domestic default。 On the other hand， it's confusing to label foreign currency liabilities and asset seizures as domestic just because they are under domestic legal jurisdiction。 This chapter was still useful and they highlighted the contribution of domestic government liabilities to other types of crises。The historical data was then compared to the subprime crisis。 Better books have been written on the subprime crisis so I don't think I got much out of this。 The conclusions were obvious and superficial， e。g。 the GFC was the worst crisis since the depression。 The authors believe that this type of crisis could have been anticipated by looking at the historical data。 I agree that it's possible to foresee but not with their method。 I think they put too much emphasis on the current account deficit as the cause of the crisis。 It's likely the other way around。 The conditions creating the crisis （loose lending） contributed to a larger current account deficit。 I am more interested in the mechanics of crises so I liked the timeline at the end of the book showing the sequencing of crises。 It was too short for me though and ignores other ways that crises can happen。 Their timeline puts inflation crises after （and as a result of） currency crashes yet it can also happen the other way around （during government deficit monetizations）。The important and useful elements were the discussion of the historical incidence of crisis， the temporal and regional relationship between crises， the charts and the data。 If you are in a hurry， just read part 1。 。。。more
Andrei ILchenko
，
An excellent treatment of the history of defaults and banking crises throughout the past centuries。 The authors present plenty of high-quality analysis。 The only reason I rate the book at 4 starts rather than 5 is because of a somewhat copious style of presenting information。Key thoughts:* there’s a trend to issuing internal public debt instead of external public debt across the world， with developed countries leading the way by hardly issuing any external debt since achieving a developed econom An excellent treatment of the history of defaults and banking crises throughout the past centuries。 The authors present plenty of high-quality analysis。 The only reason I rate the book at 4 starts rather than 5 is because of a somewhat copious style of presenting information。Key thoughts:* there’s a trend to issuing internal public debt instead of external public debt across the world， with developed countries leading the way by hardly issuing any external debt since achieving a developed economy status* defaults on internal debt occur at about 1/3rd the frequency of defaults on external debt* developing economies can default at external debt at debt/GNP levels below 60% （half the default cases）* with a few rare exceptions defaults on external debt result in debt restructuring （e。g。 some combination of reduced coupon rates， reduced notional amounts， increased maturities）* while defaults on external debt tend to be fairly binary events， defaults on internal debt can be covert—e。g。 through inflation significantly exceeding interest rates on the public debt or exchange rate crashes。 Doesn’t it resemble the present （anno 2021） situation in the eurozone and the US somewhat？* defaults on external and internal debt lead to a decrease in the countries GDP and increase of CPI as compared to readings 3 years before the event。 However the impact of defaults on internal debt is much more sever。 The authors even went to such lengths as to run a two-sample Kolmogorov-Smirnov test to prove that the difference is statistically significant。* while many developed economies “graduated” from the status of frequent external or internal debt defaulters， both developed and developing countries are equally susceptible to banking crises* liberalization of banking regulation seems to be a precursor to banking crises* there are similarities in how global crises impact GDP， CPI， housing and equity prices。 The authors ran statistical tests taking all major crises of the 20th and 21st centiares to prove it* the emergence of fiat money in the early 1900s led to higher average inflation rates than seen in 1300-1900。 。。。more
Harry Harman
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10x better than Kindleberger's 1989 book Manias， Panics and Crashes。This goes back as far as twelfth-century China and medieval Europe and it’s all quantitative data。“the most commonly repeated and most expensive investment advice ever given in the boom just before a financial crisis stems from the perception that "this time isdifferent。" That advice， that the old rules of valuation no longer apply， is usually followed up with vigor。”"More money has been lost because of four words than at the po 10x better than Kindleberger's 1989 book Manias， Panics and Crashes。This goes back as far as twelfth-century China and medieval Europe and it’s all quantitative data。“the most commonly repeated and most expensive investment advice ever given in the boom just before a financial crisis stems from the perception that "this time isdifferent。" That advice， that the old rules of valuation no longer apply， is usually followed up with vigor。”"More money has been lost because of four words than at the point of a gun。 Those words are 'This time is different。'" 。。。more
Jazzy
，
I would only recommend this book to grad students studying this topic for their dissertation （and maybe not even then—apparently it has faulty analyses）。
Daniel
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Had to read this for a class on financial markets。 It presents the major arguments stemming from mainstream economic thinking about debt to GDP ratios and capital mobility as the sources of financial instabilities。 It also argues that domestic public debt is just as important as foreign debt， and that previous literature tended to overlook this aspect。 The authors were involved in the famous scandal due to an alleged Excel error that induced cuts in government spending promising growth。 That mak Had to read this for a class on financial markets。 It presents the major arguments stemming from mainstream economic thinking about debt to GDP ratios and capital mobility as the sources of financial instabilities。 It also argues that domestic public debt is just as important as foreign debt， and that previous literature tended to overlook this aspect。 The authors were involved in the famous scandal due to an alleged Excel error that induced cuts in government spending promising growth。 That makes you very skeptical about the whole book， but one still can recognize that this previous book has some insights about macroeconomics。 Very tough and heavy read for non-economists though。 。。。more
Greg
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Makes some interesting points about financial crises and how to predict them but very hard to read。 The economic jargon and the overwhelming statistics and graphs make it very difficult for the average reader to cope with。 Seems to be written for economists only。
Marc Bouchard
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Rédigé de façon plutôt académique （tout en restant compréhensible pour quelqu'un qui n'a pas des connaissances en économie à un niveau académique）， la lecture de ce livre est plutôt fade。 En le commençant， je savais que des erreurs méthodologiques avaient été identifiées par certains chercheurs， mais ça ne discrédite pas du tout la totalité des arguments des auteurs。 Les sujets traités sont intéressants， mais j'ai fini le livre péniblement et je suis resté sur ma faim。 J'ai de la difficulté à en Rédigé de façon plutôt académique （tout en restant compréhensible pour quelqu'un qui n'a pas des connaissances en économie à un niveau académique）， la lecture de ce livre est plutôt fade。 En le commençant， je savais que des erreurs méthodologiques avaient été identifiées par certains chercheurs， mais ça ne discrédite pas du tout la totalité des arguments des auteurs。 Les sujets traités sont intéressants， mais j'ai fini le livre péniblement et je suis resté sur ma faim。 J'ai de la difficulté à en tirer des leçons claires à part la mise en garde évoquée dans le titre， comme quoi avant chaque crise financière， on prétend que cette fois-ci， c'est différent et que les indicateurs de risque peuvent être ignorés parce qu'on sait mieux gérer le système financier international。 。。。more
Philip Hartman
，
Interesting for people who are interested in macro economics。 I listened to audio book but apparently there are many charts and graphs I couldn’t see so I wish I’d gotten the hard copy。 Still I learned a lot about financial crises and the way countries and politicians typically don’t handle them well。
Jay
，
Great book。 Difficult for a layman to read。 If you want to understand the breadth and depth of the 2008 financial contraction， then have at this book。 There are useful tables in here 17。1 is a solid summary of banking and currency crises。 The data was sliced several different ways。 The authors explained the slicing and why， but it was still repetitive in nature。 Thorough science is repetitive by nature so the authors did good work， but prepare yourself before reading。 It took me 9 months to read Great book。 Difficult for a layman to read。 If you want to understand the breadth and depth of the 2008 financial contraction， then have at this book。 There are useful tables in here 17。1 is a solid summary of banking and currency crises。 The data was sliced several different ways。 The authors explained the slicing and why， but it was still repetitive in nature。 Thorough science is repetitive by nature so the authors did good work， but prepare yourself before reading。 It took me 9 months to read it。 。。。more
Priti
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Will not write a review as I scanned the book， and read a two chapters。 Enjoyed reading reviews of the book。
Anders Gränfors
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It is obvious for anybody reading this book that we are only here in this world during a short time。 There are nothing new under the sun。 It has already happened before。 Better prepare。
Brendan Hughes
，
This book provides good data points and clearly took a long time to accumulate hard to get data such as items related to country debt and the like。 This book is useful in this capacity but is lacking in terms of actual conclusions drawn from the data sets and what we can actually do with all of this information。 In my view， a lot more time should have been talking about what the data sets mean instead of just laying out all of the data。
Carmine
，
Non leggete questo libro se l'unico approccio al tema "macroeconomia e finanza" che avete avuto è stato vedere "The wolf of Wall Street"。 Non leggete questo libro se l'unico approccio al tema "macroeconomia e finanza" che avete avuto è stato vedere "The wolf of Wall Street"。 。。。more
Roberto Charvel
，
This is not an easy book to read not because the information or the topics are not fascinating， but because the way it is written makes it very difficult to engage with。 The book is extremely well documented and touches on so many questions any economist or anyone interested in understanding how financial crises happen。 It also has so much amazing data and more importantly it is able to pinpoint what data they would like to gather to make an even better analysis。 The problem with the book is tha This is not an easy book to read not because the information or the topics are not fascinating， but because the way it is written makes it very difficult to engage with。 The book is extremely well documented and touches on so many questions any economist or anyone interested in understanding how financial crises happen。 It also has so much amazing data and more importantly it is able to pinpoint what data they would like to gather to make an even better analysis。 The problem with the book is that it is written by economists for economists， not for people interested in economic history or financial crises。Probably one of the most useful passages of this book is the one related to "debt intolerance syndrome" which is defined as weak institutional structures and a problematic political system that make external borrowing a tempting device for governments to employ to avoid hard decisions about spending and taxing。 In the current state of the world， this pretty much sound like most countries， which sounds like a time bomb。 The evidence shows that in order to overcome the debt intolerance policy makers need to be prepared to keep debt levels low for extended periods of time while undertaking more basic structural reforms to ensure that countries can eventually digest higher debt burdens without experiencing intolerance。 This applies to external and domestic government debt。 This sounds like the Tatcher years in the UK。 Another particular teaching of the book is that external debt default is often a result of a complex calculus involving political and social conservations not only economic and financial ones。 Actually most countries default long before a nation literally runs out of resources。 Which introduces an additional layer of complexity to understanding pubic finance。 Political disunity is often the key driver of sovereign defaults and financial crises。 Companies and individuals should care as those engaged in FDI in the defaulting country could see their assets nationalized in a default scenario。 Before reading the book， I assumed that the only relevant types of default were on external debt， however the book is able to go into historical details about how domestic defaults may not be as well covered by the press or historians， but are not at all rare。 Of particular importance is the fact that the prove that output declines in the run up to a default on domestic debt are typically significantly worse than those seen prior to a default on external debt。 On the same topic， it was refreshing and terrifying to see that governments through high inflation and domestic default perform expropriation of the holdings of domestic residents。 The authors also raise concern about the fact that even when developed economic uses seem to have graduated from debt defaults and elevated inflation rates， they seem to still be at risk regarding banking crises。 One of my favorite parts had to do with how governments use their centralized power to crowd out other potential investment opportunities。 Governments do this by forcing local residents to save in banks by giving them few or none options to bank deposits。 They then stuff debt into the banks through reserve requirements and other mediums。 This allows governments to finance a part of its debt at a very low interest rate; financial repression thus constitutes a form of taxation。 Public finances have been in the hands of kings， emperors and other types of sovereigns that have historically found initiates to avoid paying debts through records history。 Sovereigns have coercive power over their subjects the helps them orchestrate defaults on domestic debt smoothly that are not generally possible with international debt。The book sheds light on interesting topics such as the high incidence of global banking which have been associated with high incidence of sovereign defaults on external debt。 Another relevant question for future research is the fact that most vulnerability analysis for public finances includes external and domestic debt， but most of the times only includes central government debentures and not state or municipal level debt as that information is not readily available。 Of particular interest to me was to see the performance of housing prices and pre post financial crisis based on real data。 This is a great opportunity area for a second edition of the book。 。。。more
Peter Banachowski
，
This book is not at all what I was hoping for on the topic of historical financial crises。 Unlike books such as "Debt: The First 5，000 Years" or "Austerity: The History of a Dangerous Idea"， this book is a data overload with poor job of summarizing it's results。 The last 1/3 of the book is purely appendices and notes， while much of the content portion of the book are graphs with little analysis and insight as to what the reader should be understanding。 That data itself often comes with couched s This book is not at all what I was hoping for on the topic of historical financial crises。 Unlike books such as "Debt: The First 5，000 Years" or "Austerity: The History of a Dangerous Idea"， this book is a data overload with poor job of summarizing it's results。 The last 1/3 of the book is purely appendices and notes， while much of the content portion of the book are graphs with little analysis and insight as to what the reader should be understanding。 That data itself often comes with couched statements in the text along the lines of "not enough data， but here is our interpretation anyway"。Save your time， there has to be better books out there on the subject。 。。。more
BRIAN A
，
This is a technical academic study rather than an anecdotal account of government and investor failure to heed the experience of previous bubble collapses。 It is not the fun for which I had hoped， but it does provide ample documentation of the sheer weight of evidence humans are willing to exclude from their decision making calculations。
Anwar Juan
，
TimelyHad read it a good while ago。 I would return to the highlights as a reference for the present and future。 As the book says， time brings change but human nature tends to remain the same。
Toni Kokkonen
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Some parts of the book are very interesting and well written， while many of the examples of how this and that affected the monetary systems of Napoleonic France etc are hard to find too interesting to today's global economy。 Written by economic historians for economists， over 50% of the book is graphs and tables。 Would be fun to read a newer updated version as the book is written during the midst of the 2008-crash。 Some parts of the book are very interesting and well written， while many of the examples of how this and that affected the monetary systems of Napoleonic France etc are hard to find too interesting to today's global economy。 Written by economic historians for economists， over 50% of the book is graphs and tables。 Would be fun to read a newer updated version as the book is written during the midst of the 2008-crash。 。。。more
Siddharth
，
This was a very good book about sovereign debt and the power that governments have in controlling interest rates and financial repression policies to ensure that citizens' savings end up on the Government's balance sheet under the Debts header。Domestic debt is a major part of this book。 I had absolutely no idea what it meant before， and now I think I understand it enough to actually look at Budget statements from governments and understand what is going on and how "public indebtedness" is really This was a very good book about sovereign debt and the power that governments have in controlling interest rates and financial repression policies to ensure that citizens' savings end up on the Government's balance sheet under the Debts header。Domestic debt is a major part of this book。 I had absolutely no idea what it meant before， and now I think I understand it enough to actually look at Budget statements from governments and understand what is going on and how "public indebtedness" is really calculated。*Interesting:* Seigniorage profits from reducing silver content in coins and it's modern day equivalent of printing more fiat currency to bring down the value of money and default on domestic debt 。。。more
Joseph Mullan
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Loved this book - very timely read for those interested in economics and public policy
Andrew
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Deeply insightful and fascinating。 Read this along with “Superforecasting”， by Dan Gardner and Philip Tetlock， and you will never see economic news and punditry the same way again。
Larson Cole
，
This was a helpful look at sovereign debt， but it was a little dry。
Robert Stewart
，