Economic Crisis Book

I just finished reading The Origin of the Financial Crises” by George Cooper which was published last year. The book is subtitled Central Banks, Credit bubbles and the Efficient Market Fallacy which reveals right away the approach the author is will be taking.

This is an excellent book and a must read for anyone to wants to understand how financial markets worked until recently. It is written in a clear and simple style and has no equations or math (some do appear in a short annex). The author also provides a brilliant critique of the hard core free market approach that has reigned for the last 20 years or so. For example:

“The prevailing laissez-faire, efficient-market orthodoxy cannot explain the historical pattern of economic progress, nor can it explain the emergence of financial crises, the behaviour of asset markets, the necessity of the central bank, or the presence of inflation. In short, our economic theories do not explain how our economies work.” (pg. 157)

The book ends with specific recommendations for the future. Interestingly, the book suggests to mix Minsky’s financial instability hypothesis, Maxwell’s control system theory and Mandelbrot’s fractal theory. This in itself should entice anyone to read this short but powerful book.

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