CHAPTER 1 Progressives, Engineers, and EcologistsRead more at location 197
Note: 1@@@@@@@@@@@@@@ 1907: crisi di panico nelle banche di ny. 1910: mega incendio nel montana. fino ada allora due eventi del genere erano considerati regolari... il turning point la fed era già stata istifuita e smantellata due volte. l incendio doloso era pratica comune tra gli allevatori pinchot e th roosvelt ingngigantirono la prev sugli incendi. oggi sono ancora tra noi tesi: sono i successi che fanno maturare i disastri la riduzione degli incendi causò grandi accumuli di detriti nel sottobosco. x qs esistono gli incendi naturali che ripristinano un eq possibili cause della crisi 2008: 1 avidità 2 programmi governativi: casa x tutti 3 irrazionalità 4 falso senso di sicurezza indotti dai successi precedenti la paura ha un suo ruolo die scuole di psnsiero: 1 ingegneri 2 ecologisti 1 il mondo è un meccanismo: impariamo a manovearlo 2: il mondo è un organismo: i feedback sono imprevedibili x un intelligenza centrale progressive era: 1 in charge. economia: alfred marschall theodoe roosvelt wilson stato ismo walter bagehot fed: successi fino agli anno 20. pensiero: mai più crisi 1929. 2: troppo potere a 1… 1: troppo poco potere vincono due ingegnrri come hoover e roosvelt keynes: l economia è sentimento e il governo può governarlo rsvelt: tutti gli scapoli a spegnere incendi e costruire argini argini sicuri. più costruzioni sotto l argine. meno alluvioni piú dannose. gilbrrt withe meno incendi più boscaglia. incendi più rovinosi chicago: la gente si adatta alle regole e le neutrslizza. stigler peltzman lucas 70: stagflazione. trionfo di friedman. 2 in charge in 1 si salva solo ol banchiere centeale. sará minsky a dichiararne l inutilitá mm: il sistema fin sterilizza l azione della fed mm: in un sistema stabile la finanza diventa sempre più speculativa. la stabilità destabilizza imho: destabilizza un sistema stabile senza investimenti promettenti. ovvero un sistema stagnante iper regolamentato mm: le crisi sono sempre diverse il problema di mm: la sua teoria del ciclo nn è utile. in più era un catastrofista volker: il sistema ha bisogno di paura. un bel fallimento bancario Edit
Three years later and thousands of miles to the west, massive forest fires broke out that burned across Montana,Read more at location 200
Until then, western settlers accepted fire and businesses accepted bank panics as the unavoidable by-products of a civilizationRead more at location 202
The two disasters marked a turning point in how Americans coped with chaos.Read more at location 204
The Panic of 1907 shifted opinion decisively the other way. “It is the duty of the United States to provide a means by which the periodic panics which shake the American Republic and do it enormous injury shall be stopped,”Read more at location 209
The fires of 1910 similarly altered the country’s attitude toward natural disaster.Read more at location 221
The logging industry wanted the trees for lumber; Theodore Roosevelt wanted them for national parks.Read more at location 223
Gifford Pinchot, a confidant of Roosevelt and the first chief of the U.S. Forest Service, wrote a few months after the fires: “Today we understand that forest fires are wholly within the control of men….Read more at location 225
He and his successors transformed the infant fire service into an organization devoted to preserving the woodsRead more at location 229
Yet it was that very success that planted the seeds for future disaster and that illustrates the fundamental contradiction in humanity’s quest for safety and stability:Read more at location 235
In the case of forests, putting out small fires makes large fires more devastating, since fire suppression allows more leaves, brush, and other dead tree matter to accumulate on the forest floor, leading to denser forests.Read more at location 240
The ferocity of fires in recent decades is the consequence of a warming climate combined with the fuel provided by forest density that has been allowed to develop over decades of fire suppression.Read more at location 246
As for the economy, there is no shortage of theories about what produced the crisis of 2008. One popular culprit is private greedRead more at location 247
Or maybe the crisis was the result of one of the mass obsessions that periodically sweeps the population, from tulip bulbs in seventeenth-century Holland to Internet stocks in twentieth-century America.Read more at location 250
the most important factor was the sense of safety that resulted from years of successfully fighting crisis and recession. The twenty-five years before the global financial crisis were unusually peacefulRead more at location 253
Parents vacillate between walking their children to school every day to protect them from predators, and worrying they’ll grow up sheltered and unable to cope with life.Read more at location 263
Alfred Marshall published his path-breaking Principles of Economics in 1890, but as Marshall noted, as a science it was “in its infancy.”Read more at location 274
Marshall made famous the supply and demand curves that every economics undergraduate today knows on sight.Read more at location 277
These tools persuaded experts that with enough study and will, the complexities of natureRead more at location 282
American Economic Association was founded in 1885, the Society of American Foresters in 1900, the American Sociological Association in 1905, and the American Planning Association in 1909.Read more at location 283
Progressivism, the philosophy that government could be a force for both equity and efficiency.Read more at location 287
creation of a central bank modeled on those in England, France, and Germany.Read more at location 297
The basic tools now existed for engineers to manage the economy: new regulatory powers, a central bank, even an income tax.Read more at location 312
Fed eagerly stepped forward to finance the federal government’s First World War effort.Read more at location 316
This worked well throughout the 1920s, and leading economists concluded that the problem of depression had been abolished.Read more at location 322
One theory that emerged in the early 1930s was that the engineers had overreached.Read more at location 326
This ecological view was shared by Andrew Mellon, Herbert Hoover’s Treasury secretary.Read more at location 331
If ecologists like Hayek and Mellon accused engineers of doing too much, engineers believed they had done too little.Read more at location 335
Fisher, for instance, laid the blame for the Depression at the feet of the Fed, for allowing deflation to take hold.Read more at location 338
The Fed, he said, had to restore prices and end deflation through expansionary monetary policy.Read more at location 339
He was a Republican who believed in letting market forces play out, but he was also, by profession and temperament, an engineer.Read more at location 341
Hoover thought Mellon meant well, but he dismissed his prescriptions and fought the Depression as best he could, for example setting up the Reconstruction Finance Corporation to lend to banksRead more at location 345
Franklin Roosevelt took office in 1933 and implemented a banking holiday, devalued the dollar against gold, and proceeded to overhaul the Fed and vastly expand the role of government.Read more at location 347
Government could make things much better, or much worse. This was the revolutionary insight of the British economist John Maynard Keynes.Read more at location 355
business investment as driven by “waves of optimistic and pessimistic sentiment.”Read more at location 357
If businesses were pessimistic enough, even interest rates of zero could not coax them to invest.Read more at location 358
Franklin Roosevelt didn’t just expand the government’s responsibility for the economy: he also extended its oversight of nature. Since 1910, the Forest Service’s leaders were convinced that the only thing that kept them from controlling firesRead more at location 365
The Civilian Conservation Corps, one of the New Deal’s largest job creation programs,Read more at location 373
The Depression only strengthened the conviction that the rivers should be harnessed for economic benefit.Read more at location 380
Thus, at the end of the Second World War, the engineers had assumed responsibility for much of the environment and the economy.Read more at location 386
Within twenty years, though, fissures appeared in this new consensus. Neither the economy nor the natural world turned out to be as amenableRead more at location 390
noticed that the frenzy of levee and dam building in the 1930s had not solved flooding;Read more at location 392
new problem: more homes, factories, and farms had sprung up on the floodplain,Read more at location 392
University of Chicago, argued that government management of the economy was backfiring by failing to consider how people would adapt.Read more at location 401
George Stigler argued that regulators often ended up serving the regulated, not consumers.Read more at location 402
Sam Peltzman made an even more audacious claim: regulations aimed at making consumers safer might be doing the opposite.Read more at location 403
In 1967 Milton Friedman predicted that as workers got used to higher inflation, they would demand higher wages — negating any additional demand for labor.Read more at location 411
But monetary engineering — tweaking interest rates just enough to keep both inflation and recession at bay — not only survived; it was more popular than ever. Paul Volcker, Alan Greenspan, and other central bankersRead more at location 418
he also thought Keynesian models gave short shrift to the financial system. They assumed that the central bank had full control of the money supply, credit, and interest rates.Read more at location 428
money and credit didn’t depend just on the central bank but on financial innovation.Read more at location 429
If, to control inflation, the Fed restricted the growth of lending by banks, then Wall Street’s innovators would come up with mechanisms to go around banksRead more at location 430
The longer the Fed prolongs prosperity, the further finance progresses through these stages, and the more unstable the financial system becomes.Read more at location 434
engineers’ efforts to control the economy would ultimately be self-defeatingRead more at location 436
Because the financial system is always evolving, “the next financial crisis will never be just like the last one.”Read more at location 439
Falkenstein, one of his teaching assistants and later a fund manager, recalls that his advanced classes were all classes in “Minskyism.”Read more at location 445
Apart from being a difficult person, Minsky had another problem: his theory wasn’t very useful.Read more at location 450
Confidence and credit would grow hand in hand, until some event caused them to break,Read more at location 453
“He always thought a market collapse was just around the corner,” Falkenstein recalled.Read more at location 455
Falkenstein sent his old mentor a letter, telling him, “I’m going to get rich off your theory!” Minsky was tickled.Read more at location 457
The fact was, however, that crises had come and gone while leaving surprisingly little mark on the economy.Read more at location 461
Markets had not been so turbulent since the 1930s, noted Paul Krugman, yet the economy had chugged along for seven years “without either turning into a runaway boom or stalling into a recession.”Read more at location 462
“What this country needs to shake us up and give us a little discipline is a good bank failure.Read more at location 470
