Charles Kindleberger Quotes

“The first derivative is the last refuge of a scoundrel.”

“The period of financial distress is a gradual decline after the peak of a speculative bubble that precedes the final and massive panic and crash, driven by the insiders having exited but the sucker outsiders hanging on hoping for a revivial, but finally giving up in the final collapse.”

“The propensity to swindle grows parallel with the propensity to speculate during a boom the implosion of an asset price bubble always leads to the discovery of frauds and swindles”

“The danger for world stability is the weakness of the dollar, the loss of dedication of the United States to the international system's interest, and the absence of candidates to fill the resultant vacua.”

“A follow-the-leader process develops as firms and households see that others are profiting from speculative purchases.”

“Catastrophe mathematics, dealing with such events as falling off a height, is a new branch of the discipline, I am told, which has yet to demonstrate its rigor or usefulness. I had better wait.”

“Econometricians among my friends tell me that rare events such as panics cannot be dealt with by the normal techniques of regression, but have to be introduced exogenously as 'dummy variables'.”

“It happens that crashes and panics often are precipitated by the revelation of some misfeasance, malfeasance, or malversation (the corruption of officials) engendered during the mania.

It seems clear from the historical record that swindles are a response to the greedy appetite for wealth stimulated by the boom.

And as the monetary system gets stretched, institutions lose liquidity, and unsuccessful swindles are about to be revealed, the temptation to take the money and run becomes virtually irresistible.

It is difficult to write on this subject without permitting the typewriter to drip with irony. An attempt will be made.”

“Money is a public good; as such, it lends itself to private exploitation.”

“The monetary history of the last four hundred years has been replete with financial crises.

The pattern was that investor optimism increased as economies expanded, the rate of growth of credit increased and economic growth accelerated, and an increasing number of individuals began to invest for short-term capital gains rather than for the returns associated with the productivity of the assets they were acquiring.

The increase in the supply of credit and more buoyant economic outlook often led to economic booms as investment spending increased in response to the more optimistic outlook and the greater availability of credit, and as household spending increased as personal wealth surged.”

“There is nothing as disturbing to one’s well-being and judgment as to see a friend get rich.”

“If one relies on men of responsibility to make the right choice in crisis among conflicting rules, or to follow an altogether different course for which no precedent exists, there is a danger of creating new precedents and new rules, which may be applied mistakenly under different circumstances.”

“The alternative to rules — men, which of course includes women — begs another question. Men have different responsibilities, principles, understandings, interests.”

“The dilemma posed by a choice between rules and men largely begs the question.

There are, to be sure, times when rules, constraints, commitments, contract or treaty provisions stand in the way and should be transcended because of force majeure, acts of God, some deus ex machina that makes clear that all bets are off.”

“For there to be stability (in the economy), there must be someone who imposes it, and there can only be one stabilizer at a time.”

“The 1929 depression was so wide, so deep, and so long because the international economic system was rendered unstable by British inability and U.S. unwillingness to assume responsibility for stabilizing it by discharging five functions:

1) maintaining a relatively open market for distress goods;
2) providing countercyclical, or at least stable, long­ term lending;
3) policing a relatively stable system of exchange rates;
4) ensuring the coordination of macroeconomic policies;
5) acting as a lender of last resort by discounting or otherwise providing liquidity in financial crisis.”