Thanks for joining us. My name is alex meriwether. Onbehalf of harbors bookstore im pleased to introduce tonight talk with Thomas Levenson presenting his new book money for nothing the scientists and corrupt politicians who reinvented money , panicked and nation and made the world rich. Professor levinson is joined by david dobbs. Through Virtual Events like tonights, Harvard Bookstore continues to bring authors and their work to our community and our new digital community. Find our Event Schedule at harvard. Com events where you can sign up for our newsletter and shopper shelves from home. This evening discussion will conclude for some time for your questions. If you have a question speakers go to the q and a box to submit a question at any time during the discussion. We will come to it at the end of the talk and work on answering as many of your questions as timeallows. And in just a moment ill post the harvard. Com link to purchase money for nothing in the chat box your purchases and contributions make this virtual author series possible and now , more than ever support the future of a landmark independent bookstore so thank you. We appreciate your continued support now and always. And finally if we have any tech issues tonight during the event we will do our best to resolve them quickly. Thanks for your patience and understanding and now im pleased to introduce our speakers. Thomas levenson is a professor of science writing at mit and the author of several previous titles including the hunt for vulcan, einstein in berlin and newton. Hes also received several awards for his featurelength documentary films including the walter p tischler science documentary award, peabody award and new york chapter emmy and he is joined this evening and conversationby journalist and ethicist david dobbs. Also to the book my mothers lover and reef madness. Both discussing money for nothing in which the history of science meets the history of finance. It has been long listed for the Financial Times and mckinsey business book of the year award and author james glick writes levinson is a brilliant synthesizer with a grand view of history. Or is the first of moderns finance among catastrophe and flawed, a gripping story of scientist and schindlers all too pertinent to our modern world and so now im pleased to turn things over to tonights speakers with the digital podium is yours. Thanks so much alex. Tom, i was intrigued by this book from the getgo because of the title. Which obviously references a great song by dire straits but some other things as well. What all did you mean to convey by the title . The great miracle of capitalism is captured by the immortal words of a cultural icon for us all. If you recall, the euro slogan i will gladlypay you tuesday for a hamburger today , thats wimpy in popeye and the reason that so important is thats credit. What credit does, what borrowing does is it creates money in the here and now out of a promise that we make for the future. And figuring out how to do that in a way that could sustain, that would be prone prone to crisis or my whole book is about it but the first crisis is exactly this, but figuring out how to make credit work and not just for todays drink or hamburger but for all nations and hold economies and hold global systems. Figuring that out was one of the great innovations of a period that historians called early modern era. Festival as your book details its spurned a lot of other innovations to and theres two ways, money for nothing, one is i gave money and i got nothing. And the other is all right, im making moneyand i didnt get anything and both things, theres a lot of both of those things here. What led you to, when did you start and whatled you to write it . All my books come out of something that bugs me and usually they come out of some thread i find in another project that i may not have time or may not be appropriate into that project but just something is out of place and i want to figure it out. In this case i was doing some work on isaac newton. And you know, a great crime story and all this cool stuff. And you know, in reading up about newton and trying to dive more into his life and character i found that 20 years after the event that was chronicling in that project he had some troubles withmoney. And he famously said i can predict the motions of the heavens but i cannot predict the madness of the folly of the people. And i said thats weird. I want to know more about that and that ultimately led to this. That makes sense. He does play an interesting role in this. Both role he plays is actually he suffers from i dont think its, i dont want to keep asecret about what happened in this book. This is about sort of the bubble of allbubbles. And isaac got caught in it in a bad way. But he also laid the foundation in a way, yes . But newton is an integral character in the entire book. Hes there at the beginning and at the end and the critical thing is the whole story hinges on this really wonderful malicious, horrifying financial crash that occurs in 1720. In fact the actual moment that the stock market turns on this great boom from really january but especially april through the summer and then right at the beginning of september and you know, pretty much today 300 years ago, it turned and it just all went to hell. So thats happening 300 years ago. Reminded me how bad it took. I feel when the film sort of made my heart beat, it was when you wrote that he traded an annuity that was worth every year more than his salary. You kind of say he put that into cash and put it into this stock that then fell off a cliff. Thats right. Its hard to say what each transaction cost him but overall it looks like he lost 20,000 pounds. Thats a lot of money in 21st century money but 20,000 pounds in 1720 was the equivalent of, certainly the equivalent of some millions today. It would not be an exaggeration to say it was three or 4 Million Pounds and it could be much more so he took a bath. He was just wrecked. It have any money left . He was lucky in that he basically that half his fortune on this and he still have the other half. And he still had a job that paid him okay. It wasnt out on the streets but he had been, he built from being an ordinarily modestly prosperous kind of middle level member of London Society tosomebody who was genuinely rich. For a few months. And he got usually rich for a few months but the real real heartbreak for him was that he got out of the market with a reasonable profit, about 20,000 pounds. And one of the telling parts of the story, were leaving ahead in the narrative but one of the telling parts of the story is he got out. He figured he made as much money as he needed. He was happy with his return but the stock kept rising in this sort of feed on itself frenzy that happens in money that we all experience in our own livesmost recently. In the 2000 and before that, of the tech levels about the housing boom and before that those other steps, weve experienced that and knew was sitting there with his real profit that was cash in the back. He had it, it was safe and he couldnt stand watching the stocks. It was as if looking at it from theoutside its as if he felt it was losing money by not getting those gains. So he sold on average around 500 pounds a share, Something Like that and the share finally get a peek six weeks to two months after he sold at 1000 units so it doubledagain. This was starting at the beginning of the year around 200 but its a really big rapid boom, almost tenfold. He sold and then bought it again. And it didnt sell fast enough. He bought some of his stuff, not all of it. When he reentered the market he bought some of itliterally at just above the highest price britain paid for it. So we can all say youre not nearly as smart asi get isaac newton and look at what he did. Go back then and how did he, but tell briefly what created this whole . There are two ways to look, it was a approximate set of decisions in the late 17 teams and there was a huge intellectual cultural and political change took place in the mid17, mid17th century. Right around the time of the bubble so 50 to 70 years there were big changes going on in the way written and britain and europe in general about all kinds of things that turned out to be important. And basically its the scientific revolution and some of the things that go along with it along with britain but england and britains specific Political Revolution makes the role of parliaments and running the country and the role of the money men in london in funding the country much more important than it had previously been. This is because they essentially a new set of tools and set of calibrating where money moves and how it works made it for the first time. That it was possible to try to manage an economy, basically. Is that right, or a market. There were people who were thinking about running the whole sort of business of getting and spending for the nation in a way that would maximizenational power. A bought this in france, they bought it in london. There was this belief that on some way they had crackedit. And this is cartoon but its a cartoonwith some truth to it. You can almost reduce the scientific revolution to 2 core concepts. One is that you quantify and mathematic size experience to gain more understanding and gain the ability to predict and hence manage the future. One of the critical things with some of the basic mathematical ideas of scientific relation including especiallycrucially newtons greatinvention , thats all about change over time. The other thing that new and many others did, its never just one person but newton is a symbol and avatar and in some ways the leader at the climactic battle in the revolution as it were the other thing is imperialism and not just looking out of the world but the systematic observing , measuring, experimenting on the world. Trying things, getting this information, turning into numbers and performing math on it allows you not just to think about abstract things like how do you do a lot of rhythm or how do you work out that series or just celestial things like where is jupiter going to be in six months time or what governs the behavior of the moon or the tides. These are things we worked on but the idea of mathematics is asian, quantification and rigorous empiricism can be applied to you and me, here and now figuring out what to buy, what tomorrow and they weredoing it back then. One of the things that gets worked out in this period is the concept of present value. If i have a piece of land or maybe a business or a ship, its going to do things over time that make money. Whats its value right now . How do i take the income stream i get off growing wheat off this eight acre land or how much does that make, how should i think about what that land is worth given whati know. Your ability for it to change over time in essence was calculus. As you said earlier newton said he couldnt predict the dynamics of the humancause or something to that effect. So it is, were thinking right now and trying to manage this pandemic because knowing the virus is one thing but electing people is another. So again, is it cartoonishly, is it accurate to say, hopeful to say that this book is a story about modern financial sox and quickly foundered and also, that sort of like the atomic science of this past injury, when they thought they had the knowledge to control, to predict markets and thereby control them so they keep them calm the growing, they unleashed some powerful forces and said in some cases they were so powerful they couldnt control them. I think thats right. To me one of the things i found actually fairly late in sort of trying to figure out how to make the book sing was like newton, defoe shows up over and over again in the book. Because hes in some ways the first journalist or one of the first journalists. Hes a muckraker, hes a propagandist. And hes a moral thinker. But one of the things i think people know less about him as they think Robinson Crusoe and so forth is that he was on the very beginning an enthusiast for this new ideas, his first big book was an essay on projects and it was a sort of catalog of an celebration of all the things you were trying to do that new ways to farm the land and with manufacturing, he was of thatstuff. And as britain actually invented thetools of credit , aggressively in the 1690s, actually inventing what we now call the idea of a national bank, thats a thing that hasa birthday. The reason it has a birthday is in the european system and certainly in england, the idea behind running estate finances was that ultimately it lent on the monarch, many removes by the time we get to the spirit but still, in theory its the kings verse. And what happened in the 1690s if that changed. Parliaments controlled it and they started contracting debt and authorizing acts of parliament and trying to use different Revenue Streams that they could create by passing attacks and this was a radical change in something as seemingly dull and boring as borrowing money to pay the soldiers. And so defoe watches all this stuffand im rambling on but theres a point. I have a point. Daniel defoe watches all this and sees it work and england is able to do things with this borrowing like wars with france and so forth and really expand its reach and power by having access to credit in a way that other european nations are not able to do. And he says this is our secret power, this is our secret power and he writes this passage where he talks about how the government raises debts and then manages them and he creates this whole elaborate metaphor that its an automaton, its a machine and thats amazing because he has this vision of it as being something you can ration and design and control in that way. But its also explicitly a newtonian metaphor, its as predictable as covers, shaking up a future curb iskind of like calculus. Its interesting to that he got mixed up in manyother ways. So this is important. At the time and theres a crisis of revelations in the book, thats a general outlier but at the end you talk about why this is so vital to britain and at first they regrouped and walpole figured out how to have the cake and, thats a wrong metaphor. How to do this. That was written to see countries with more riches and more soldiers because they can raise money quicker to purchase out their way as youput it. The public itself emerges from in some ways the successes of the first attempts to move these new ideas about money and credit to their advantage because what happens is from the 1690s forward or actually, britain gets involved in a series of wars last until1815. Sometimes its referred to as the long 18thcentury and one of the things that defines it is the first of william and mary wars against louis xiv and the last of reddish war against france ending with a defeat of new napoleon in 1815, thats the parameters so in these firstrounds , the invention of the National Debt is explicitly responsive for the extraordinary cost of war britain cant just channelout of every day receipts. Theyre coming in right now enough to keep the army in the field. So they start raising quite vast sums starting from 1693. And that first war ends and they kind of regroup a little bit but then another war starts and they keep doing the same thing and they always borrow when theyre right at the point of crisis but the terms of the loans are crafted, that gives them decades and decades of high Interest Rates and by the mid17th, over half of britains annual revenue, the money the government takes in from all sources is going to pay off interest on the debt that has been accumulated over the previous five years. So the key thing was they thought they found a way to actually, this company at first was in a place to take the first shot at consolidating this debt and then selling it, selling the right to receive payment of the debt. You could attain that by buying stock in theory. So they packaged it as an asset which in a sense it was but only if you count an asset as dumping to come. Absolutely it was an asset but they said britain followed borrowed every way they could read a carried Interest Payments for years in the lottery. They sold annuities so people could buy our guaranteed payment for two or three lives. They sold just straight up debt and they all had different terms and different constraints and one of the things about almost all of them is the people who let the money to the government and received these annuities or lottery tickets or whatever in return could keep the income stream but they couldnt sell the underlying audits. So they spent 100 pounds to buy something from the government, they would get their five pounds or eight pounds or whatever it was a year but they never get there hundred pounds back. They just keep getting their income stream. What the company did was a said lets get rid of this complete mess of crap, its too complicated and nobody can get theirmoney out of it. We will trade our stock, if you give us your debt government will allow us to create more stock , the government will pay us at a reduced rate and will pass that on in dividends and use anything we can to fund a trading operation, that will because all very rich and best of all, if you take stock instead of hold onto your debt and you never want the money back, you can just walk down toExchange Alley, go to jonathans coffeehouse and shake say i got a share, who wants it. And the government got better terms on their debt. They got the ability to retire, all kinds of things and the company got this big transit business and it was supposed to be a win win kind of deal. And the problem was they were right. This kind of debt for equity swap had worked on a small scalebefore this. It has worked since. But they set it up in a way that would if it were, if it had all hung together it would have made the people who were inside of the company before the deal happen insanely rich. Richer than you can imagine. Richer than anybody previously had been. That sounds vaguely familiar. So the government agreed to this because they were so desperate but also they had no choice. They really needed tosolve this problem but it was also a great deal from the government. It was good for the time it seemed that it was good for everybody at the time but what ensued was, well, tell me a little bit. I want to get into in a minute how the bubble that is essentially a combination of conscription as people, some people, the people who ran the subsidy company and others who became allies through bribery and so on, there were people who were deceiving others and also a lot of people who were deceiving themselvesincluding isaac newton but tell me the role , just solve really what we now call the side market. Of the modern one, this centered around a place named jonathanscoffeehouse. How did that get started . It was a digression in the book on coffeehouse culture and we dont have time here. You even have the notes coffeehouse recipe. But the stock market, there had been joint Stock Companies for 150 years or more at that point. But up until the 1680s or so were very few shares and almost never traded for the east india company, the hudson bay company, Royal African Company which was a slave trading company. They existed and they were in fact companies that had shares that in theory can movebetween people but they very rarely did. They tended to be bought and sold by a small group of people. And in the 1680s, that started to change and in the 1690s it changed rapidly and there was a lot of new Companies Formed to try all kinds of things. Mining companies, insurance companies, they called this period the 1690s roughly 1750 , its called the financial revolution. Its a term of art amongst historians of the time. And one of the arguments in the book is to understand the financial revolution simply as part of the scientific revolution. There was a large intellectual transformation going on and the people doing them in separate today im being a banker and tomorrow im being a financial revolutionary. Its why you get people like edmund halleyworking out the math of life insurance. , newton himself writing about how credit and Interest Rates were. How important things worked. And people who had skills and interests, they were enormously broad in their interest at that time but anyway , so the stock market existed. There was this place originally stockbrokersworked in this building called the royal exchange. And they got booted out for being basically too loud and obnoxious in the mid1690s and moved more or less en masse about 100 yards to this little alleyway called Exchange Alley which had four or five coffee shops and they just sort of set up in the copy rooms and started trading their and the most important of those was jonathans which became the center of what was increasingly understood as the london stock exchange. Theres nothing left of that now. If you go to Exchange Alley still exists but if you walk down theres just this horrible post blitz bland building with no doors and no windows and one of those blue oval plaques that says this is where jonathan was. But the thing about the bubble itself, the key thing was how youdesign the deal. And this is the first time, the thing to remember about this is this was a bubble, yes there was deception, yes people deceived others and were self deceived. Sometimes the same people were actually conning others while they were fooling themselves but this was the first time any of this had happened. So the deal was set upwith a fatal flaw in the middle of it. Nobody ever said how much, what the value of a piece of debt was in terms of these shares. The company was able to say we will give you three chairs for that piece of debt today but tomorrow 80 we will give you two and we get to keep the difference. We get to keep some of the shares that we would otherwise have traded. So the market setting that price. They were adlibbing it and they were playing a dance with the market. They started out really being a debt for equity swap. They were creating what worked in the end effectively bonds. This was again, the lead of the story is how the modern bond market first starts to form riyadh people who are in finance will tell you, the stock market is where the headlines, but the bondmarket is where the action is. Its much larger, more gets traded in the state of nations hangs on the stock market in a way that reflects doesnt drive in the same way area battles starting right here and they set up a really interesting deal. Its a deal that could have worked under certain circumstances but the way they set it up at flaw in it that meant thatfirst of all , the whole idea worked only if the stocks stayed expensive. So sometime around, you were doomed. You were supposedly buying these assets but you were also justifying the rise. You were buying it because it was expected to go up. It went up 50 pounds yesterday, ill buy tomorrow and ill be rich. Which is and how peoplebuy stocks now. Theres just this email coming up from the wall street journal every day called the Intelligent Investor and right now theres an amateur boom in options trading and im reading this going ive seen this before and it happened in june 1720 and in fact, in 1720 were using the same options we use today. Call options, by options and the cell. Theres very little new under the sun and we still behave stupidly around money just the same way we did 300 years ago. Theres a question i want to turn to hear but first, the similarities between this in 2008, the class of this fancy derivative supposedly gathered and kept faith, tons of mortgage debt proved to be not safe and completely exploited partly because as Michael Lewis writes about in his book big sure, virtually no one understood the algorithm that supposedly explain how it impacted title ix. And you have to wonder if things are going on like that now but its amazing how closely that the level parallels. Just this containment of debt and the main thing, one big thing thats changed simply was it was complicated then, obligated enough it was hard to understand for many people and its just way more complicated now though you have the same problem. I argue that its, its days roughly the same in terms of the level of complication. Remember, the bubble was the first time it hadhappened. Calculus was 40 years old or 50 years old. I mean, one of the things and basically i agree with you. I think the 2008 crash and the south sea bubble aremuch more similar than they are different. Thats my feeling to. In some ways my book is the prequel to lewiss book. The parallels for you are slick and so much of a piece. The structure of the bubble, how it insulated, white insulated, what was required for people to believe it. What happened to those who didnt. Just as lewis chronicled these handful of people who saw that this was unsustainable, could never work and there was the critical thing in the 2008 thing was that these assets that were thought to be uncorrelated sothat they were , you couldnt have, you could lose the value of a mortgagebacked security because you had thousands of houses and theyre all over the country. There was this diversity in income streams, it turns out all those houses were much more correlated and got more so as the marketgot more and more inflated. Anything was happening. Functionally the same thing was happening in the bubble with the price of the stock rising and everybodys ability and willingness to bid on new releases, new issues of the stock turning on the fact that the stock was high, remain high and continue to grow and the moment there was any reason to stop believing that just as the moment there was any reason to suddenly realize that in fact these assets were supposedly secure because they werediversified worked , its a psychological trigger. The moment that realization occurs the bottom falls out and as one says you discoverwho is not wearing pants as the tide goes out. Its that moment where you realize im not holding what ithought i was. So big question is coming in here and one in regards to something, i believe you addressed in the first half of the book roughly which is has to do with the history of government lotteries, this is from susanna sphere and she writes she recently in her ancestors who immigrated from germany to britain originally are selling lottery tickets for print and its her Families Research suggests that for what suzanne understands, they sometimes it is because jews in many countries including britain did have opportunities so that selling lottery isone way they can survive. Shoemakers. Thats right, sort of the jewish story in all of this is actually quiteinteresting. I dont go to it in any detail in the book but jews were kicked out of england in the medieval period by edward i. Again, because he was fighting worth he couldnt afford and kick the jews out so he can see their assets and fund his attempts to conquer wales whichsucceeded. And the jews work back officially into england until the middle of the 17th century, 16th century. So they come back and they dont have deep roots in the society and they dont have to huge number of ways to make aliving. And when england starts trying to raise money to fight these wars in 1690, one of the things they tried, some of those that were invented i think in italy but these ideas of doing lottery sales that are actually ways to persuade people to use the thrill of gambling to persuade people to lend larger sums of money. The idea was you sell a ticket, 10 pounds a ticket and it carries with it a chance of winning a prize of 100 pounds or thousandpounds. So and then even if you didnt when yougot an interest payment. Whatever it was per year. There are two reasonsto buy. You win the lotto. You bought it for the blood and you hang onto itfor the income. These started happening in 1693, 1694. One of the innovations in england was to sell them cheaply enough so that you werent just borrowing money from the gentry and aristocracy that the seamstress, women were involved in the markets quite in a quite significantweight in the 1690s and 70s and early 18th century. The pastry maker, and sometimes people really small children. And people would band together, five people would buy a 10 pound ticket for a chance of the lottery and then they would decide whether they keep it for the interest rate. Theres this huge expansion of the pool of people you could extract money from throughout the government and people had to sell these things. When you sell 1 Million Pounds worth, thats a lot of tickets yougot to move. You decide how big a public frenzy dominated this news. It seems not everyone obviously but like, it was a massmarket in that sense. So i dont know if susanna is still on, im dying to know whether her ancestors moved to britain but theres another question you to address kind of the other way around in the book which is the importance, it concerns the importance of the new instruments they had, this new knowledge, new Economic Science if you will of the success of the British Empire and the specific wording is this is from a gentleman in merriweather, what is the connection between the Industrial Revolution that was started not long after this period and the introduction of the use of credit that helped support new industries and so on . The answer of course is its complicated. The short answer is. Its the hurricane version of the book. What happens after the bubble is the market crashes, thousands of people lose their shirts including their important people, people who you would think of as having pole on the government and there was a lot of pressure from a lot of different places. To sort of try and make it right again, bail people out. There was a proposal even just to reverse all the trades. Getting them. Whether its the bank of england. The duke of portland,the richest man in england. That was a different blend. The new portland noted in 720 as the richest man in england and ended it so far but he couldnt see broke from where he was. It was sounderwater. Much so he was forced to avoid imprisonment for debt and get out of dodge. And he took the usually lucrative post of governor of jamaica to try to rebuild his fortunes and avoid dealing with any creditors. And the problem was he was a gambler. He gambled on horses, gamble on this, gamble down a South Sea Company and gambled on his ability to make a second fortune in jamaica for makers notorious the dangerous environment got him and as with his other bargain he lost that one too. He died of yellow fever after three or four years in office. Its quite interesting just to read your account of where these different creatures ran and one thing that also rings true today or could also today was there was some accountability but it was limited. There were a few who were prophecies left along or you could build out. They work fully bailed out. But many institutions were. Fewer people went to jail then should have but to the question that john wasasking , what happened after the bubble crashed is not everybody went to jail and the duke of portland at least get a post that would get him out of dodge. But critically Robert Walpole is referred to as the first true Prime Minister of britain said we arent going back on the deal. The point of turning all of britains debt into south seas stock was to rationalize the debt and make it easier for us to run and were going to hang on to that. Weve done that. In other words they were going back on theoriginal deal. If you loan the government money, you wont get screwed. The interesting thing to me is in france they had done something similar at almost exactly thesame time and when they cameout and had to rebuild , the mississippi bubble crashed. They said yes, we arent going to make people hold, were going to have hard at freeze but were going to go back to borrowing, we are going to risk any fancy financial shenanigans. Going to go back to the old ways of borrowing money these longterm promises paying higher Interest Rates, unredeemable stuff and walpole said no and over the next to 1722 in the early 1750s, walpole and his successor basically supervised the construction of turning south seas stock into south seas bonds and into a tradable bond. Turned the rest of British Government debt intosimilarly uniform, easily tradable stuff. Showed britain could pay its interest on a regular basis with very little risk of interruption and in general made the entire apparatus of credit into a simple boring, useful, there was never an occasion again when people could pump the price of government paperin the same way. It tends to resemble, it would look familiar to us. Minus whatever it is, thats its going to be worth what it is when you can look up the chart. In 1720 the wild west, in 1750 its you know, you can no longer carry your guns into town and by the early 19th century youve got consuls and justice and honestly stable and reliable credit Financial System but the interesting, what britain does with this is a reservist just for the government. They set up rules for private companies cant use this new apparatus of credit but the treasury can. So what britain gets out of it is that first real boost in their ability to exert power all across the globe. In a minute i want to ask you what the us did differently. But a couple of quick questions, one, but then has a wonderful pair of questions. One, not trivial and the other one being. The first one is the britain and american editions have different subtitles, is there any form there are which you prefer and why or are you best not commenting i love all my children equally. They have different covers two and theyre verydifferent in the cover style. I think theyre both gorgeous. The american one is morebrash and high contrast, thebritish one is lovely blues and subtle textures. Its great. I think the difference is in britain, theres more broad cultural memory of, this is a london story but their subtitle reflects that. So i dont have a preference, i think theyreboth great. It sounds like theyre both simply just like their audiences and the other question is, your thoughts about when the current bubble will burst. Are you going short . I want everyone, do not use this. This is but notfinancial advice. Recently i am happiest when i have more cash right now. I think, but the thing about this, the point i really hope comes through in the book is that one of the things you can see from the south sea bubble and the way that crises that are extremely similar in structure and sequence have occurred again and again and again afterwards is that yes, financial capitalism is this extraordinarily powerful effective tool. It makes us rich. It has made the world rich in ways that are really the contrast in the way people can organize using the prospects for the future to build an Economic Life now that secures that future. Its extraordinary. It was truly a radical change in our relationship to time our lives and how we can build a future for ourselves and our children. Thatsall great. The flip side though is it comes with a systematic failure mode in because human beings are less rational than they thinkthey are. And money mania seems to be an integral part of the way finance works. So i can say with absolute certainty that we will have a major downturn. If i live a normal lifespan, certainly within my lifespan. I feared sooner than thefull extent of how long i might live. And i couldnt possibly, one of the things we see is we dont know what it is that when the various frailties that affect modern finance. Leverage, contagion, unstable relations between parties that these kind of things occur in different settings over and over again and theres always some trigger point that creates a sort of rippling effect that goes through the system and causes instead ofa minor correction this time at the crash. Its impossible to predict what thats going to be and when its going to happen seems to be, it has been for the last 300 years of financial capitalism and regular recurring feature so will hit hard times again soon. The other two questions, do money manias compare to financial me as or are they the same . The mania is great and its fascinating and its interesting but on some level i dont know if you remember, wasnt pat rocks. Therewere these stalls that everybody had to have one christmas. I cant either but that was like the bubbles. So there are commodity bubbles and sometimes they are set up. There is an attempt to manipulate markets but sometimes theres just this human fancy get engaged in something and it seems important when things get priced out of the and sometimes they deflate without great harm and sometimes that people mortgage their souls to buy a tulip bulb, it can have more serious consequences. They are like financial bubbles to the extent that they get financial lies that people borrow money. The issue promissory notes, these kinds of things but financial bubbles are distinct because you can construct an ever larger amount of financial risk on a single asset by using different financial tools, those options we were talking about. Thats what makes it so hard. This goes to a couple of questions, one is Cabbage Patch dolls and or gfs or beanie babies are the analog for the thing you described one of them is mortgagebacked securities and you described it as more complex and i think one thing that struck with me is it seems to be on the same shelf of to invest by or not a five, one of them being never invest in something you dont understand when which almost everyone in that bubble did as far as that, is that people failed when they had this moment of revelation, they realize thatthey were holding , its not what they thought they bought or they recognize that it had changed , that was supposed to be aboutmoving goods from south america and cornering the market. And that part of it, this has literally never sailed and it became Something Else and when there was one investor, you pointed out that when they saw that, they got out and they made a profit. It wasnt huge but i mean, it was somethinglike 100 percent. I think youre talking about thomas guy. Some of the audience they have heard of guys hospital. Was founded out of his profits from the bubble and he was a bookseller who had become a fairly successful investor and he bought south seas stock during the decade before the bubble when it had been basically a slowmoving company that basically paid interest on a certain amount of government securities it had held. It was kind of an indirect way to hold government paper. And then the bubble took off and what had been a boring source of income for him became this enormous speculative profit and at some point he said i had enough. Ive made all the money i need to make. I was rich before and im going to sell all my shares. He had a pile of shares and it took him six weeks to sell them so he was trying to avoid moving the market by bailing out. And he got out and basically roughly half the value it would attain atthe peak. So he made a net profit of 250,000 pounds and remember i said earlier20,000 pounds was millions. Its many, many millions. And he stayed out. He kept his money. And you said its this huge hospital in london. Which is a nice story. There are happy endings in the story and i think this was a good story to tell particularly at bookstore readings because he was a bookseller first. He made good. Okay. That seems to me a good place to wrap unless you have one last thing you want to tell us. I want to say one thing which is an Harvard Bookstore. Harvard bookstore is one of the great bookstores in the country and ive been buying books from them since 1976 and i am so glad theyre still around. Whether or not anybodys still listening wants to buy my book, please buy some books for them. They are by all means buy my book but they are utterly deserving of any support that anybody can get them. The other thing i want to say is that monday, wednesday friday and look at the bubble as this triumph in story where peoples discovered a new way to think about nature and human life and they made some terrible mistakes on the way what came out of it are some of the abstract tools and intellectual engines that allow us to lead a life vastly more comfortable and those in the bubble did. And then tuesday thursday and saturday i think its a really sad story. In 1720, somebody even as smart as isaac newton can be forgiven for not having figured it out because he was brandnew, there was no experience. There was no sort of body of accumulated learning to sort of recognize what was happening to him. This happened to us in 1929 had happened in the 90s. It happened in 2007 and eight. There are signs that something was brewing at will happen sometime, i hope i can get throughcollege first. If me that much time pleased but its going to happen again and if newton and his fears and his contemporaries have an excuse for not fully grasping the predicament they were in, weve seen it happen enough through history and in our own minds that we absolutely do not have that excuse and one of the things i hope people get out of the book is a sense that we have to hold the great and the good the fire set so that we dont get burned again so soon in exactly the same way. Many lives were wrecked in the great recession. Word for the wise. Thank you everybody for coming. Thanks in the. Book tv is television for serious readers all weekend, every weekend. Join us saturday at 8 amin nonfiction books. Charlie mitchell is the author of a new book come here to his. Its called cyber in the age of trump the unraveling of Americas National security policy. Before we get into the essence of the book, what gives you a background in cybersecurity . Guest well, i have covered the federal government for fora long time and covered Congress Come used to be editor of roll call, and i