What’s so bad about a recession? The germs of Money Mania began with that chance comment in late 2007.

The fallout from the collapse of two Bear Stearns hedge funds earlier in August had gathered pace and we all clustered around Bloomberg screens daily, waiting to see if someone had called time on happy hour.

 On the 1st of December 2007, the US officially went into recession. It was not a surprise in hindsight, given the events of the previous few months, though few of us at the time had any inkling of how much more painful life was about to become. As defaults soared and the euphoria of the last few years evaporated, the finger pointing began. It was the fault of bankers for lending irresponsibly. It was the fault of central bankers for keeping interest rates so low. It was the fault of the politicians for turning a blind eye to the weapons of financial mass destruction massing outside suburbia and Capitol Hill. Everybody else was to blame and everyone wanted just to return to happier days when bust was a phrase confined to late-night television and poker games, growth and ever-rising financial markets were a given and money was something we could all make or access. In short, they wanted to get back to normal.

Are crises an inevitable consequence of economic growth? Are they always bad? Do we need a lender of last resort? Are paper money systems an expensive and ultimately doomed experiment? When does a crisis of finance become one of society? These and many other implications are explored in the book’s chapters.

In the end, we conclude that rises and falls are as natural to the economic condition as breathing is to the human condition. It’s when we try and stifle these ebbs and flows that the system revolts. Therein lies the lesson: a clear perception of the characteristics common to these episodes can only help in warning off and curbing our irrational enthusiasm so that we remove the risks of our speculations becoming systemic. Try too hard to argue your innate brilliance and the outcome is inevitably the same, as amply demonstrated throughout recorded history.

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