Chapter 1. WELCOME TO THE TWENTY-FIRST CENTURY: The Lessons of the First Decade and the Historical Precedent for Today's "Unprecedented" Crisis

It was a crazy year.

In 12 short months, the world's ruling empire saw a widespread mortgage crisis, shocking the financial system and sending interbank lending rates through the roof. Complex financial instruments collapsed like a house of cards, and overleveraged businesses suffered. If their short-term loans came due and they couldn't refinance, that was it. Locks appeared on the doors, and the windows were papered.

Through it all, however, a handful of new countries shone. These nations were growing thanks to lower wages, cheaper commodities, and looser regulations. Financial supremacy started to shift as the world looked for a new center of power. Across the ocean they found one.

We're not talking about 2008, by the way.

We're talking about 1873, at the beginning of what some historians call the real Great Depression. And that promising new center of power was the United States.


... But it certainly rhymes.

And in this case, it's rhymed pretty closely so far. The similarities are staggering, even though the participants may have changed. And while the Great Depression brought about a revolution in big government and interventions, the Crash of 1873 embodied the end of an era—something we're almost certainly witnessing now. Let us explain.

In the decade leading up to 1873, Europe saw the rise of the Austro-Hungarian ...

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