A Macat Analysis of Manias, Panics and Crashes

When Manias, Panics, and Crashes was published (1978), the world was entering a new period of global economic turbulence. Economists based their analyses on the assumption that investors act rationally and often communicated their ideas with dry, technical language. Using a more literary, descriptive style, Kindleberger argued that markets are unstable precisely because investors act irrationally when they get swept along on a tide of optimism or despair making the financial markets susceptible to crises. Kindleberger shows a distinct pattern in worldwide financial crashes and concludes that the world needs a single, central body to stabilize global markets at their most fragile moments.