Reddit reviews Fragile by Design: The Political Origins of Banking Crises and Scarce Credit (The Princeton Economic History of the Western World)

That book was published before they corrected their spreadsheet error--it applied some of the same theoretical lessons of the debt issue & therefore is somewhat poisoned.

For the record, this book discusses the exact same crisis set as a R&R but explicitly includes those stable countries (like Australia, NZ, CA) who haven't had financial crises, or debt-fueled growth slowing.

My point isn't to pitch for a particular book, but it seems that a certain Academic integrity requires that a 'panoramic' analysis of any issue, includes those aspects uncomfortable for or in opposition to one's own theories.

I've never seen Akerloff & Schiller, for example, shy away from confronting monetarist & other rebuttals. Even Larry Summers who, in other issues is pretty sleazy (namely Russia privatization & his misuse of research on women) has a good deal of integrity in Academics when it comes to being wrong. And a past generation of economists, such as JM Keynes, Nikolas Kaldor, Paul Samuelson & a young Milton Friedman & Robert Solow regularly delighted in admitting their errors publicly. (See Kaldor & Friedman's debate and also Samuleson's 'A Summing Up'--in addition, B. deLong's admitting that healthcare's positive externalities are low, Stiglitz' Mea Culpa on globalization, Summers on free trade & protectionism, Bruce Bartlett on fiscal stimulus, Steve Marglin's volte-face in one direction & Gintis & Bowles in the opposite direction--on the opposite issue, refusal to update beliefs, we have the trenchant obstinance of inflation hawks and deficit hawks )

Edit:

Here are some other panoramic sources on the same area of study as This Time is Different:

Manias, Panics & Crashes is a famous textbook on the issue.

Akerlof & Schiller's Animal Spirits is a smaller range but an interesting analysis

For the record, Schiller was one of the people who foresaw the housing crisis

Mark Blyth wrote a history of the concept of Austerity and its political causes & consequences as well as the economic data--while polemical, and coming squarely down against austerity, is nonetheless expansive and well written.

Peter Bernholz has written a massive study, but a short book, on inflation crises in world history, expanding from Rome to the modern day that, while chained to an outdated Austrian conception of money & finance, is sufficiently data rich.

Additionally, there's a neo-classical study of Trade & Growth I quite enjoy, written as an implicit neo classical answer to the new economic history & institutional theory. Here's a neo-malthusian perspective on the same issue.

Here is a post-Keynesian analysis of the same stuff, a neo-marxian/neo-ricardian one, an alternative B-of-P crisis theory, a geoist analysis by another person who foresaw the 2007 crisis and a radically alternative view of debt & money which is theoretically interesting but empirically sparser.

Charles' Geisst is a historian with a balanced analysis of both Wall Street & debt in history.

Not an economist, David Graeber has written an interest history of debt.


The point is there is a VAST, empirically & theoretically rich & sophisticated set of analyses, from diverse & contradictory perspectives, all of which are higher standard works than either the Debt & Growth paper or the This Time is Different book. I add these overkill, both for those who are interested in follow up & to emphasize the diversity & availability of good scholarship from other authors.

If you're interested, Fragile By Design by Calomiris and Haber. It's controversial but made a lot of sense to me. From the Amazon recap:

"Analyzing the political and banking history of the United Kingdom, the United States, Canada, Mexico, and Brazil through several centuries, Fragile by Design demonstrates that chronic banking crises and scarce credit are not accidents. Calomiris and Haber combine political history and economics to examine how coalitions of politicians, bankers, and other interest groups form, why they endure, and how they generate policies that determine who gets to be a banker, who has access to credit, and who pays for bank bailouts and rescues."

https://www.amazon.com/Fragile-Design-Political-Princeton-Economic/dp/0691155240

What you're looking for is the idea of "Free banking." The US had that system for periods in its past, so you aren't asking a hypothetical, you're asking about history. There are tons of resources and papers on free banking. It worked very well in Scotland during the 18th century, but worked horribly in the US during parts of the 19th. In the US, it was pretty awful because the proliferation of banks plus the prohibition on inter-state banking (few people remember this, but banks weren't allowed to operate across state lines in the US until 1994) led to the creation of one of the most unstable economies in the world prior to the establishment of the Fed.

The academic scholarship is interested in when and why free banking works and doesn't work. The Hayek/Friedmans of the world love it from a libertarian / pure economic perspective, but as with most "pure" economic ideas, the actual implementation of it has a spotty record.

If you go to an academic library you'll find tons of stuff by searching "Free banking," same with google. I just started reading this book on the topic, and it's approachable for non-economist types. On the topic of banking system structure in general (which is very much related to the success and failure of free banking; the banking system must be designed to compliment free banking, and vice versa) I cannot recommend highly enough Calomiris and Haber's Fragile by Design.

I would highly recommend Fragile by Design, by Charles Calomiris and Stephen Haber.

It really puts it into perspective how much of a game changer Bitcoin really is.

I mean there is an argument to be made "economically" that having to many small banks is not that good for the economy as the well being of some of them might rely on geographical considerations. Canada has 6 large banks for the whole country and arguably besides some credit unions these are the only banks you deal with.. I read a paper discussing the optimal number of banks (for competition) etc and the banks in Canada are arguably just upward sloping side of the LRAC but not to far from the optimum, so Canada could probably do with one or two more banks but any more and you would be getting optimal economies of scale.

American is a bigger (population) country so they would arguably need more banks but having 20 big banks would arguably be better for the American economy. First off regulating 20 banks is easier to do then regulating 1000s of small banks your regulations might actually be effectively enforced. If something happens geographically your bank would not collapse and FDIC would probably be in a better position. If you ever read about the theory of banking is that in the end of the day the bank is giant netting institution and source of capital having 1000s of banks makes this job more difficult. Also American banking technology is well behind the rest of the world on a retail front and one of the problems comes from there being to many banks.

If you want to read about American Banking History you should get a book called Fragile by Design. https://www.amazon.ca/Fragile-Design-Political-Origins-Banking/dp/0691155240/ref=sr_1_1?ie=UTF8&qid=1511054017&sr=8-1&keywords=fragile+by+design

CRA investments came into swing under Clinton, whose administration used is as part of the third way campaign in which housing and wealth standards could be raised without raising any additional taxes or creating any on the budget programs. The Clinton administration pushed for these types of loans to be given out, lowering capital requirements for banks that lent under this program and insuring their safety through Freddie mac and Sallie mae. Then once Glass-Stegall was repealed and bank mergers began to happen, bigger banks would make these sorts of loans to please community action groups such as ACORN who would then testify on their behalf in front of the Federal Reserve review boards that the banks who were doing the buying were building up communities that were traditionally ignored by most banking operations, and that therefore they should be allowed to buyout smaller local banks. This is the argument made by Charles Calomiris and Stephen Haber in their book "Fragile by Design". It continued to pick up steam as the likes of Wachovia and other mortgage originators started to make boat loads of money by making high -risk loans for cheap and then selling off the mortgages. Human pressure and greed kicked in from there and others took started to do the same thing in order to keep up with their competitors.