Transcripts For CSPAN2 Thomas Levenson Money For Nothing 20240711

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Find our Events Schedule at harvard. Com events and read our newsletter and shop our shelves from home. And this will conclude for some time for your questions. If you have a question for our speakers, go to the q a box to submit questions at anytime for the discussions. Well come to those at the end of the talk and well answer as many of your questions as time allows, and in just a moment, ill post the harvard. Com link to purchase in the chat box and your considerations and contributions makes this possible and landmark independent bookstore. Thank you. We sincerely appreciate your considered support now and always. And final i will, if we have any tech issues tonight during the event well do our best to resolve them quickly. Thanks for your patience and understanding. Now im pleased to introduce our speakers. Thomas levenson a science writing at mit and including the hunt for vulcan, i am simon berlin and feature and documentary films including an award, peabody award and the new york chapter emmy and hes joined this evening in conversation by journalistsen essayists, david dobbs. My mothers lover and wreath madness. Well be discussing money for nothing in with i the history of science meets the history of finance. Its been long listed for the Financial Times and Mckenzie Business book of the year award and author james glick writes, levenson is a brilliant synthesizer with the grand view of modern science amid catastrophe and fraud. All too pertinent to our modern world. So, now, im pleased to turn things over to tonights speakers, the digital podium is yours. Tom, i was intrigued by this book from the getgo because of the title, which obviously references a great song by dire streets, but some other things as well. What all did you or do you mean to convey by the title . Well, the great miracle of capitalism is captured in the immortal words, icon for us all. If you recall, the slogan, i will gladly pay you tuesday for a hamburger today. And wimpy and popeye. And the reason thats so important is thats credit. What credit does, what borrowing does, it creates money in the here and now out of a promise that we make to the future. And figuring out how to do that in a way that coulds sustaineded, that wouldnt be prone to crisis or killed by crisis, and my book about crisis is exactly it, and figuring how to make credit work not just for todays drink or hamburger, but for whole nations, whole economies, whole systems and figuring that out was one of the great innovations of the period that historians called a modern era. Thats theawn of as you put the future of it that spurned other innovations, too, and what thereswo ways, money for nothing. I get money and i got nothing. Right. Andhe other is, i am making money and i didnt get anything and both things, theres a lot of both of those things here. What led you to when did you start this book and what led you to write it . The book all of myooks 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 it may not be appropriateo go into that project, but you know, just something is out of place and i want to fige it out. In this case, i was doing some work on isaac newton, a you know, great crime story and chasing counterfeiting and all of this cool stuff and like sort of reading up about newton and finding his character, i found that 20 years after the event i was conicling in that project, he had some troubles with money and he famsly said, i can predict the motions of the heavens, but i cnot predict the madness and the folly of the people. And i said,hats weird. I want to know more about that and that ultimately led to this. That makes sense. Yeah, he does play an extremely interesting role in this. One role he plays is actually, he suffers from, i dont tnk its i need to keep a secret about what happene in this. This is about sort of the bubble of all bubbles and isaac got caught in it in a bad way, but he also laid the foundation in a way, yes . And i mean tha newton i an integral character in the entire book. He was there at the beginning andhere at the end. And the critical thing that the whole story hinges on this really you know, jt wonderfu delicious, horrifying financial crash that occurs in 1720. In fact, the actual moment that the sck market turned, the was a great boon from january and april tough the summer and right into the beginning of september and you know, ptty much like today, 300 years o. And it turned and the slide started and nothing was, you know, it just it all went to hell. So thats happening 300 years ago. So remind me how bad newton took. The i think this that sort of made my heartbeat for him there what was when you wrote that he traded, i ink, an annuity that was worth every year more than his salary, he cashed that he, you know, put that all to cash and put it into the stock that then fell off a cliff. Thats right. You know, its hard to say what each transaction cost him, but overall, it looks lik he lost 20,000 pounds and you know, thats a lot ofoney in the 21st century money, but 20,000 pounds in 1720 was the equivalent of making leaps across so much time, but certainly the equivalent of some millions today. It would not be an exaggeration to say it was 3, 4 milon pounds and it could be much, much more. He took a bath. He was wrecked and it bugged him. Did he have any money left . Yes, he did. He was lucky in he basically bet half his fortune on this and he had the other half and he wasnt actually outten the street, but he had been, you know, hed built from being an ordinarily sort of modestly prosperous middle level of society to someone who is genuinely rich. For a few months. Yeah, well, hugely rich for a few months, but the real heartbreak for him, he got out of the market with reasonable profit about 20,000 pounds again, and that one of the telling parts of the story, i mean, were leaping ahead of the narrative, but one of the parts of the story, he got out, he, you know, figured hed made as much money as he needs. He was happy with his returns, but the stock kept rising in the sort of of feed on itself frenzy that happened, and weve all experienced in our own minds recently. The 2000s and before that, the tech bubble and then the housing boom and before that, other stuff. Weve experienced that and newton was sitting there with his real profit that was cash in the bank, he had it and safe and couldnt stand watching the stock sort of you know, its as if looking at it from the outside its as if he felt he was losing money by not getting those gains. Right. And so he sold for, on average, around 500 pounds a share, Something Like that and the share finally hit a ak, like six weeks to two months after he sold at a thousand, so he doubled again. And this is starting the beginng of the year around 100,o its a g, rapid boom, alst 10 fold. But he sold and then bought in again. He bought in again. And didnt go fast enough, right . He too you willy bght some of it not all of it, when he reentered thearket he bought some of it literally at jus about the highest price anybody paid for it. So, he because youre you, me, theres no one, we could a say, youre n nearly as smart as isaac newton and look what hedid. Well, go back then and how did he well,ell briefly what the eated this. Ll, there are two ways that created this bubble. An approximate set of decisions in the late 17 teens andhere wa a huge cultural and intellectual change that took place from the mid 17th century, 1700 through toight around the time of the bubble. So, over 50 to 70 years, there were big changes going on in the way britain a europe in general thought about things that turned out fob really imrtant. Basically its the scienfic revolution and some things that go an i long with talong with britain, england and then britain, specific politic revolution which makes the role of parliament and running the untry and the role of the moneyed men in london in funding the country much more important than theyd previously been. This is because they essentially, a new set of tools and a set of calibrating where money moves and how it works. Exactly. Made it for the first time appear that what, it was possible to try to manage an economy, basically, is that right . Well, market . No, there were people who were really thinking about red wing the whole sort of business of getting and spending for the nation in a way that would maximize national power. They thought this in france, they thoht it in ndon. There was this belief tt on someevel theyd cracked it an figured this out. You know, and this is a carto cartoon, right . T its a cartoon with some truth to it. You can almost reduce the scientific revolutions of two core concepts. One is that you know, you quantify and mat mat mathematecize some things. And one the basically scientific equaonings, cluding especially newtons great invention the calculus. One thing that newton and many others did, never just one person, but newton is sort of a symbol and avatar in some ways the leader in the climatic battle. And not just looking at the world, but systemic measures, experimenting on the world, trying things, you know, getting this information, turning it into numbers and then performing math on it, allows you not just to think about abstract things le how do you do a logrhythm or where is jupiter going to be, and what regulates the moon or the tide. But the idea of mathizati and qutification and it c be applied to you and me here and now, figuring out wha to buy, how to borrow, those kds of things. They were doing this then. E of the things worked out is the concept of present value. If i have a piece of land or maybe a business or ship that going to do things over time that makes money, wha is its value right now . How do i take the income stream i get off growing wheat on this acre land for 20 year how much does that make you know, how should i think about what that is worth given what i know. Correct. Because your ability to predict the change over time. And the calculus as you pointed out. And you said earlier, newton said he count predict the dimes of the human heart or something to that effect. So, it is, you know, right now, im trying to manage this pandemic. Knowing the virus is one thing and so, in a wa is it, ain, cartooishly is it accurate to say, helpful to say that this backs a story of how modern finance isounded and then actually quickly foundered and so that sort of like the atomic sciencef this, when they thought they had the knowledge to control the to prekt markets and keep them calm and growing, they unleashed some powerful forces d they were so powerful they couldnt control them . I think thats right. One of th things i found, actually barely late in sort of trying to fure out howo make the book sing. The passage b danieldefoe. Like newton it shows up. Hes in some way sort of the first journalist. Hes a muckraker, a propagdaist. And one thing that they dont know about him is that he was from the very beginning of his life just enthusiasm for this book, a sort catalog and celebration of all the things people were trying to do that, you know, new ways to form the land and ways to manufacture and he loved that are the so he loved that sort of stuff. And aggressively in 1690 inventing what we now call the idea of a National Debt. Thats a thing that has a birthday. The birthday is in 1693 and the reason it has a birthday, up until then in the eopean system and certainlyn england, the idea behind running a states finances was that ultimately it rested on the person who owed the mon and the person who owed the money many, many times removed, this is the experience that, still, you know, in theory its the kings purse, or the queens purse. And what happened in the 1690s that changed and parliament started to control and they authorized them by acts of parliament and there was a different revenue stream that they could create. And this is a radical change in something as, you know, seeminglyull and boring as borrowing money to payhe soldiers. And defoe watches this stuff. Im rambling on, but tres a point. He has a point. Daniel defoe watches this and sees it work and england is able to do things with this, figh wars with francend so forth, and really expan its reach and power by having access to credit in a way that other european natns were not able to do and he says, you know, this is our secret power. This is our super power and he writes this passage talking about how the government raises debts and manages nem and crtes an elaborate metaphor, s clock work, and a machine and its amazing because he has a vision of it as something you can ration and desn and control, just the kind of thing you were talking about, but it also explicitly newtonion metaphor. Its as predictable as, what has the neatness of curves. And again,s what what can happen to a curve, the future curve with calculus and i think its interesting, too, that then they got mixed up in the other wave. So this is important at the time and i mean, there is a he quite a few revelationsn the book and i kind of know the general outline of it. But at the end you talked about why thiis so vital to britain and aft it. At first, they regrouped and you know they figured out how to havehe cake and, well, thats the wrong metaphor. How to do this in in a controlled manner and that was wide written, could defeat countries with more riches and more soldiers because they could raise money quicker t punch up their weight as you put it. The bubble itself emerges from, in some ways, the successes of the first attempts to use the new ideas about money and credit to their advantage because what happens from 1690 forward, britain gets involved in a series of wars that last until 1815. The period between 1815 sometimes referred to as the long 18th century and one of the things that defines it is the first of william and marys wars and the last british war against france ending with the defeat of napoleon in 1815. Thats the parameters. So in the first round, the invention of the National Debt is extraordinary cost of war that brynn britain cant handle, have enough to keep the army in thefield. So they start raising vast starting from 1693, and the war, that first war ends and ey kind of regroup a little and another war starts, and theyeep doing the same thing and they always borrowhen thre right at the point of crisis so the terms for decades and decades and high Interest Rate and you know, by the mid 17 tes, over half of britains annual revenue, the money the government takes in from all of its sources is going to pay interest on the debt accumuled over the previous 25 years. Right. So the key here was that they thought theyd found a way to well, actlly this company at first was in a place to take the first shot and consolating this debt and then selling it selling the right to receive the payment of the debt, you could attain that by buying a stock, in theory. Right. So they packaged debt as an asset which in a sense it was, but only if you count an asset as something to count. Absolutely it was an asset. What they did, they took britain borrowed where they could, sold lottery tickets and carriednterest payments for years, the lottery, right . And they sold annuities so people could buy guaranteed paymen for lives for two liv or three liv and they sold, straight up debtnd they all had different terms and they all had different constraints, and one of the things about almostll of that is that the people who lent the money to the government and received these annuitiesr whatever or lottery tickets or whatever in return could keepp the income stream, but they couldt sell the underlying assets. They had a contractment they sent 100 pound to buy something from the government and they would get something, pounds, eightounds a year. What the company did, lets get rid of this complete mess, and too complicated on nobody can give the money out. Well trade our stocks, you know, if you gives your debt. The government will allow us to create more stock and give us the stock and the government will pay us interest at a reduced rate and well pass it on in dividends and well use anything we can to fund a trading operation that will make us all very rich and best of all, if you take stock instead of hold onto your debt and never want the money back, you can walk down to Exchange Alley and go down to jonathans coffee shop and who wants it. And the government got better returns on the debt and all kinds of things and they had the big tranche of business and it was supposed to be a win, win, win kind of deal and the problem was they didnt, you know, they were right. This kind of debt for equity swap had worked. It had worked on a small scale before this and its 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 the company before the deal happen insanely rich. I richer than you can imagine. Itounds vaguely familiar. Oh, yeah. So there was the government agreed to this becae they were so desperate. Andhey all ty really needed to solve this problem, but it was aays a gre deal for the government. It was good f them at the time and seemed good for everybody at theime. Right. But what ensue was well, tell me a little bit, i want to get into in a minute, how the bubble was essentially a combination, it seems to me, from your description as people, some people, the people who ran the South Sea Company and others, who became allies through br bribery and people deceiving others and others including isaac newton, tell me e role, and the birth of what we now call the stock market, yes . The modern one and this centered around places like jonathans coffee house. Right. How did that get starte i mean, a my diegression in the book. The coffee recipe. How he wanted his beans. Yes. The sto market, there had been junktock companies for 150 years or more until that point and until the 1680s, there were very few shares and they were almost never trad for the east india company, the Roya African Company and all of those, they existed and they were, in fact, companies that had shared, that in theory, they rarely did. And they tended to beought and sold by group people. It wasnt a public thing. And in the 1680s, that startedo change and 1690s changed very, ver rapidly and a l of new companies, and trying all kind of things, glass making, mining companies, insurance companies. They called this period by the wa 1690s to roughly 1750 thats called the financial revolution, a term of art amongst historians during this period and one of the arguments in the book, to actually understand the financial revolution simply as part of the scientific resolution, there was a large cultural revolution going on andeople doing them didnt separate, oh today im a banking revolutionary and tomorrow, a financial revolutionary and why you get people worng out the math of life insurance. Newton himse writing about how credit and ierest rates, would. Im trying to quantify how important things worked. Yeah, and y ow, people who had skills and interests, they were enormously broad in their interests at times. , but, anyway, the stock market economi existed, and oriy they worked in a building called the Royal Exchange and they got booted out for being more or less too loud and obnoxious and they moved into an alley, Exchange Alley, and there were coffee shops and they started trading there and the most important of those is jonathans which sort of became the center of what was increasingly understood as the london stock exchange. Theres nothing left Exchange Alley exists, but if you walk down, a horrible post blit bland building with essentially no windows and a little blue oval plaque, this where jonaths was. Nothing quaint there. Nothing like that. But the thing about the bubble itse, the key thing was how you design the deal. And this was the first time and the tng to remember about this, yes, this was a bule, yes, there was deception, yes, people both deceived oths and were selfdeceived, 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 theeal was set u with a really fal flaw in the middle of it. Nobody ever said how much, what the value o a piece of debt was in terms of the shares. So,he company was able to say, well, we give you three shares forhat piece of debt today and tomorrow maybe two. We get to keep the difference, keep some of th shares that we otherwise traded. And kind of the markets seing that price, they were adlibbing it. They were playing a dance with the mark. You know, they started out really being a debt for equity swap. They were creating, you know what worked in the end effectively bonds. Again, to leap ahead in the story, h the modern bond shth ma first starts to form and people who are, you know, in finance will tell you, the stock market is where the headlines come, but the bond markets where the action is. Its much, much larr and mortgages traden it and the fatef natio hangs on it and thats all staing right here anthey they set up a really interesting deal. Its a deal that could have rked under certain circumstans but the way they set it up, had a flaw in it that meant that first of al the whole idea worked only if the stock staye expensive. So sometime around if it plunged, you were doomed. Ou were in you were supposedly buying theseassets, but you we also just buying the rise. Right. Yeah. You were buying it because it was expected to go up. It went up 50 pound yesterday, ill buy it today and ill go 50 pounds tomorrow and ill be rich. And it helps people buy stocks down. Yeah, and its just this email coming out from the wall street journal ery day called th intelligent investor. Theres a boom in options trading and iveeen it happen before in 1720. In fact, i 1720, they were using some of the sam options we used today. Call options, put options, buy options. Yeah. Theres very little new under the sun and we still behave stupidly around money the same way that we did years ago. And theres a question to turn to here, but first, the term between this and 2008, you ow, the collapse othe this fancy derivative that supposedly gathered and kt safe, you know, explorable, tons of mortgage debt proved to be not safe and itompletely exploded. Partly because as Michael Lewis writes about in his book, the big short virtually no one understood t algorithm that tied this into an untiable knot. You wonder how things are going like that now and how closely the bubble parallels thatone. A containment of debt that people dont understand and explodes and one big thing ths changed. Its complicated then and complicated enough its hard to understand for many other people and now you have the same problem. And i argue that its, you know, it stays roughly the same in terms of the level of complication. I an, remember, theouth sea bubble was the very first time it happened. Calculus was, you know, 40 years old or 50 years old, right . And the go ahead. I mean, people one of the things, and basically i agree with you, i think tha the 2008 crash and the south sea bubble are much, much more similar than they are different. Yeah. Thats my feeling, too, yeah. And in some ways, my book is the prequel to, you know, lewis book. Yes, like the parallels are on the kind of slickness, and its so much of a piece, yeah. And the structuref the bubble, how it inflated, why it inflated. What was required for people to believe it. What happened to those who didnt . I mean, just as, you know, lewis chronicled these handful of people who sort of saw this this was unsustainable. Could never work a there was, you know, the critical thing in the 2008 thing was that the assets that werehoughto be correlated so you couldnt have, you know, you couldnt lose the value of a mortgagebacked security because you had thousands of hous and different type things, all over the country, that, that and the other thing, and diverse iome streams and all of those were much more correlated and got more so as the market was more and mor inflated. Functionally the same thing was happening in the bubble with the stk of the price rising and everybody ales abilitynd willingness to bid on new issues release of the stock and at any moment there was any reason to sp believing that and just at the moment there was a rson to suddenly realize that, in fa, these assets that were supposedly secure because they were diversified werent, and t moment that that is a psychological trigger. The moment that that realization occurs, the bottom falls out and as Warren Buffett says, you discover whos not wearingants as the tide goes out. And its that moment where you realize im not holding what i thought it was. Exactly. And so, some good questns are coming in here, and one with regards to something, i believe you addressed in the first half of the book, roughly, which is it has to do with the history of government lottery. This is from Susanna Spear and she writes that she and her ancesto ancestors were selling lottery tickets for the prints and its her familys research that suggests sus susanna understands they did this just because jews in many countries, and in britain, selling lotteries to survive, rabb and shoe makers and thats right, thisas the the jewish story in all of this is actually quite interesting. I dont go into it in any great detail in the ok, but jews were kicked outf england in the medieval period by, i think, edward i, and his attempts to subdu scotland which failednd his attempt to conquer wales, which succeeded. And the jews werent let back officially into england until the middle of the 17th century, 16. Okay, so they come back and they dont have deep roots in society and they dont have, you know, a huge number of ways to make a living and when england starts trying to raise money to fight the wars in the 1690s, one of the things they try, something actually envented in italy, but the idea of doing lottery sales that are actually ways to persuade people to use the thrill of gambling for people to use larger sums of money. Theres a ticket, 10 pounds of ticket and a chance of winning a prize. Yes, and so then even if you didnt win, you got an interest payment, 5 , 10 whatever it was a year. There are two reasons, yeah, you win the lotto and you bought it for the flutter and hung onto it for the income. And these, again, one innovation in england is sell them cheaply enough so you werent just borrowing money from the gentry and aristocracy, you know, the seamstress women were actually involved in the markets in a quite significant way in the 16, 1 thats and the pastry maker and sometimes and by investing, and buying. Yeah, and so people would band together. Five people would buy a 10 pound ticket for the chance of the lottery and then decide whether to keep it for the Interest Rate. Theres a huge expansion of people who and when you sold a Million Pounds worth, and the tickets, thats a lot of tickets. And you saw how big of a public frenzy, this dominated the news and everyone was in, not everyone, obviously, but it was a mass market in that sense. So i dont know if susanna is still on, im dying to know now when her parents, ancesto moved to britain. Theres anoer issue you address the other way around in the book, it concerns the importan of these new instments they had. This new knowledge. Right. This economic science, if you ll. And the success of the British Empire and the specific wordin this is from jn meriweather. What is the connectn between the Industrial Revolution that was started not long after this period and the introduction of the use of credit that helped support, you know, new industries and so on. Right. The answer, of course, is its complicated. You know. [laughter] weve got 15 minutes altogether, so a simple answer. The short answer is the version of the book. What happens after the south sea bubble, you know, the market crashes. Thousands of people lose their shirts, including very important people, people who you would think of as having pull 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. Yes. There was a proposal just to reverse the trades. You know, and but theres the bank of england or the duke of portland, the richest man in england. Who was a shoemakers son. And the start of 1720 the richest man in england and end up so far broke you couldnt see broke where he was, it was so underwater, so much so he was forced to, you know, to avoid imprisonment f debt and yet g out of dodge and he took the usually lucrate post of the government of jamaica and avoid dealing any creditors, and the problem s, it was a gamble. He was a gambler, he gambled on a horse, gambled on this, and gambled on his abity to make a second fortune in jamaica before jamaica peace, you know, notoriously dangerous environment g him and as with his other bargains, he lost that one, too, and he died of yellow feverfter three or fo times in office there. And where the different creares ran, one thing that also rings true today, or there was some accountability, but it was of a limited there were a few who were proxies and others were left alone or even bailed out. They werent fully bailed out, but they werent institutions were, correct . Many fewer people went to jail than should have. To the question that john was asking, so what happened after the bubble crashed is yeah, not everybody went to jail, and the duke would get him a post that would get him out of dodge. But Robert Walpole referred to as the first true Prime Minister of britain said we are he not going back on the deal. The point of turning britains death into south sea stocks was for us to easier to run it, were going to hang onto it. They werent going to go back on the original deal. If you loan the government money, you wont get screwed, basically. Yeah, yeah. And the you know, the interesting thing to me is that in fnce theyd done something very similar at almost exactly the same timend when they came out andad to rebuild fromheir crash, the mississippi bubble crash. They said, yes, were not going to make people whole and were going back to borrowing, were not going t risk any fancy shenanigans again, wre going back to the old ways with the longterm promises with higher Interest Rates and walpole said no. Over 1722 and the early 1750, he and his successor, pelham, basically supervised the cotruction of, you know, turned the south sea stocks into south sea bonds in effect and there were into it a tradeable bond,urned the res of the government debts into tradeablestuff. Showed that britain could pay interest on a regular basis with very little risk of interruption and basically made the entire apparatus of credit into a simple, boring, usef, you know, there was never an occasion again when people could bump therice of government paper in the se way. It came to reseme a bit re that we had and by the year, whatever it is, kno exactly what its going to be worth when, you can look at the chart. N 17, its the wild west, in 1750 its, you know, its civilization you can no longerarry your guns int town and by the 19th century, counci and enormously stable system. What britain does, its just for the government. They set up rules that the companies cant use this apparatus, but the government can. What britain gets out of it, the first real boost in their ability to exert power all across t globe. I a minute i want to ask you, if we have time after these questions, what t u. S. Did differently. I will do that. And how they. Just getting to at. I thought you were. A couple of quick questions. One, patty has a wonderful pair of questions. One, not trivial, but Little Things and the other one big. Okay. The first one is the brit and american bks have different subtitle. Is there a different story there or which do you prefer and why . Or youre best off not commenting . I love all of my children equally. They have different covers, too, and the american o is more brash and the british one, blues and subtle. And i think the differenc is in britain theres more broad cultural memory of, you know, this is aondon story and, you kn, so i think their subtitle reflects that. No, i dontave a preference. I think tyre both great. Tha makes sense. I haventeen the british one, but it seems like the book is aimed at their audiences and her other question is, your thoughts on when the current bubb will burst. [laughter] are you going short or all right. Everyone, do not use this. This is not financial advice. Personally, 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 extraordinarily powerful effective tool. It makes us rich, its made the world rich in ways that are really, you know, the contrast in the way people can organize, you know, using the prospects for the future to build an Economic Life now that secures that future. I mean, 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. Thats all great. Itlso has mes go ahead, go ahead. The flip side is, it comes with a systematic failureode built in, because human beings are less rational than they think they are, that and money mania seems to be an integral part of the way, you know, finance works. So i can say with absolute certainty that we will have a major down turn, you know, if i live a normal life span, certainly within my life span i fear sooner than, you know, the full extent of how long i might live. And i couldnt you know, one of the things that we see, we dont know what it is that when the various sort of frailties that affect modern finance, leverage. Yeah. Contagion, you know, unstable relations between parties, 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 through the system and causes instead of a minor correction this time its the crash. Its impossible to predict what thats going to be and when its going to happen and it seems to be, it has been for the first 300 years of financial capitalism, a regular recurring feature. So well hit hard times again soon. When, i dont know. The other two questions is wondering, is this do money manias compare to the manias . Are they esstial to say with the other bubbles . And the tune of manias scinating and great and its interesting, but, you know, on some level, i dont know if you remember, it wasnt pet ros, im trying to remember there were these dls erybody had to have christmas, i cant ye, i cant either. Yeah, its a bubble. So there are commodity bubbles and sometimes theyre set up. Theres an attempt to manipulate markets, but sometimes theres just this, you know, human fancy gets engaged in something and it seems really important and you know, and things get priced out of whack and sometimes they deflate without great harm and sometimes if people mortgage their soles to buy a tulip bubble tulip bulb. You can have different assets by using different financial tools and what we talked about. Thats what makes it so hard. This goes to a couple of questions, one, is Cabbage Patch dolls and or chia pets and or beanie babies are the candidates for the things you described and one is this is more complex and thats so true and i think one thing that stuck with me, did it be on the same shelf of three maxims, to invest, one of them being never invest in sometng u dont understand, which almost eveone in that bube did, as far as the mortgage and so forth and so on. It is that people failed when they had this moment of revelation, they realized what they were holding was not what they thought theyd bought. Right. Othey recognized that it had changed. First the south s trade compy was supposedo be about moving goods fro south america and yadda, dda. And this literally never sailed, almost. And when there was one investor, you pointed out that when they saw that they got out and they made a profit, it s a huge well, it was Something Like 100 , right. I know it. The i think youre talking about thomas guy, some of the audience may have heard of guys hospital. That was founded out of his profits from the bubble. And he was a book seller who had become a fairly successful investor and he bought south sea stocks the decade before the bubble when it had been a slowmoving government and paid interest on some securities that it held and it was an indirect way to hold government paper and the bubble took off. What had been a boring source of income for him became this enormous speculative profit and at some point, ive had you have in. I made the money i made before and i was rich and now im obscenely rich and i had a pile of shares, and he was trying to avoid moving the market by bailing out and he got out roughly at half the value it would attain at the peak. So he a vast more than he paid. So he made a net profit of 250,000 pounds. Remember, said earlier, 20,000 pounds was millions, its many, many many, many millions and he stayed out. He kept his money. Didnt he build you said the 19 buildings, its a huge hospital in london, a Major Medical center, yeah. That was which is a nice story to. There were happy stories and happy endings in this story and i think this is a good story to tell particularly at bookstore readings, events, because he was a book seller first. Who made good. Yeah. 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 thanks toarvard bookste. Harvard bookstore is one of the great book stores in the country. Ive been buying books from them since 1976 and im so glad theyre still around and y know, whether or not abody still listening wants to buy any book, plee buy some books from them. By all means buy mybook, but theyre utterly deserving of any support that anybody can givethem. The other thing i want to say is that, so monday, wednesday, friday, i look at the south sea bubb as this triumphant story where people discovered a new way to think about nure and human life and they made some terrible mistakes on the way, but what came out of it were some of the abstract tools and intellectual engines that let us lead a life vastly more comfortable that be others did. And even someone as smart as isaac newton can be forgin for not figuring it out. There was no body of accumulated learning to sort of recognize what was happening to them. You know, this happened tos in 1979, the 90s, 2008. There is are signs that something is brewing that will happensometime. I hope my kid gets through college first, give me that much time, please, but its going to happen again and if newton and his peers and his contemporaries have an excuse for not fully grasping the predicament they were in, weve seen it enough, that we absolutely do not have that excuse and one of the tngs that i hopeeople get out of the book, y know, a sense that we have to hold, you know, the great and thehe good feet t the fire that we dont get burned again so soon in exactly the same way that smany lives were wrecked in the most recent great recession. Word for the wise. Well, thank you, everybody for coming. And thanks, indeed. Youre watching book tv on cspan2 on this holiday weekend. Television for serious readers. Here are some programs to watch for. Tonight, political scientist debra stone argued that numbers arent objectives. Thats followed by a look back at many of the authors that appeared on our monthly Author Program in depth over the past 20 years and then law photographer john fabian, find a complete schedule at book tv. Org or on your program guide. Here are some of the current best selling nonfiction books according to politics and prose bookstore in washington d. C. Topping the list in first principles, journalist thomas rigs looks at greek and roman policies. And also a hidden caste system in the united states. Followed by actor Matthew Mcconnaugheys green lights, and then an author ap humorist. Wrapping up, a look at some of the best books according to washington d. C. s politics and prose bookstore a look at the astronaut and late senator john glenn, the last american hero, some of these authors appeared on tv and you can watch their programs on book tv. Org. We cant wait to see you again when the library opens to engage in new conversations about womens history, equality, democracy and the right to vote

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