Stephen Haber

cato-journal-coverCato Journal
September 22, 2014

Reviewed by Vern McKinley

Charles Calomiris and Stephen Haber have taken on a big task in their book, Fragile by Design: The Political Origins of Banking Crises and Scarce Credit. Their goal is to explain the double hit that economies and financial systems suffer when they experience a banking crisis and then the tightening of credit that often follows. In order to keep the final product manageable, and thus avoid having a 2,000 page book, the authors limit their case studies to the United Kingdom, United States, Canada, Mexico, and Brazil. Their time frame extends back to the 17th century. At its core, their argument is that financial crises are not random; they flow from the “Game of Bank Bargains”—that is, political deals that dictate everything in a banking system from the issuance of licenses to the means for distribution of credit.

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