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Life After Growth: How the global economy really works - and why 200 years of growth are over by Tim Morgan

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Chapter 8: The Madness of Crowds

AS CARMEN REINHART AND Kenneth Rogoff have demonstrated in their magisterial book This Time Is Different, asset bubbles are a recurring feature of economic history. [15] The book tracks financial excess over eight centuries, but it would be no surprise at all if the Hittites, the Medes, the Persians and the Romans, too, had bubbles of their own. All you need for a bubble is ready credit and collective gullibility.

Some might draw comfort from the observation that bubbles are a long-established aberration, which might suggest that the boom-and-bust cycle of recent years is nothing abnormal. Any such comfort would be misplaced, for two main reasons.

First, the excesses of recent years have reached a scale ...

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