# This time is different Author: [[Reinhart]], [[Rogoff]] ## Review I finally got around to reading this. People in the industry talk down about it because of the calculation errors they made in Excel, but overall this has some useful info. The authors examine the global incidence of 4 types of crises over a 200 year span. It covers external default, domestic default, periods of high inflation, and currency crashes. It gives a great overview of where and when crisis have happened. While I knew about the existence of many of the crises mentioned, there were many I didn't know about. These incidences also tended to cluster in time. There was also a bit of discussion on the policy and macroeconomic context at the time of crisis (financial repression vs financial liberalization, commodity booms and busts, wars, etc). The charts and data throughout the book are really good, especially in part 1. I will revisit it again in the future. The chapter on domestic default was interesting because that type of crises is not discussed nearly as frequently as the other three. They created their own dataset of domestic debt and default events but I disagree with their classification method. Interest rate changes, debt restructuring and currency replacements (after hyperinflation) are clearly cases of domestic default. On the other hand, it's confusing to label foreign currency liabilities and asset seizures as domestic just because they are under domestic legal jurisdiction. This chapter was still useful and they highlighted the contribution of domestic government liabilities to other types of crises. The historical data was then compared to the subprime crisis. Better books have been written on the subprime crisis so I don't think I got much out of this. The conclusions were obvious and superficial, e.g. the GFC was the worst crisis since the depression. The authors believe that this type of crisis could have been anticipated by looking at the historical data. I agree that it's possible to foresee but not with their method. I think they put too much emphasis on the current account deficit as the cause of the crisis. It's likely the other way around. The conditions creating the crisis (loose lending) contributed to a larger current account deficit. I am more interested in the mechanics of crises so I liked the timeline at the end of the book showing the sequencing of crises. It was too short for me though and ignores other ways that crises can happen. Their timeline puts inflation crises after (and as a result of) currency crashes yet it can also happen the other way around (during government deficit monetizations). The important and useful elements were the discussion of the historical incidence of crisis, the temporal and regional relationship between crises, the charts and the data. If you are in a hurry, just read part 1. ## Key Ideas ## Related - [[Government debt]] - [[A History of Interest Rates]] - [[Debt Crises]] - [[How Inflation Works|Hyperinflation]]