Boom and Bust

Capitalism without failure is like religion without sin—it doesn’t work.

From a macroeconomic perspective, confidence does not lead to efficient use of investments.

Risk is the price you never thought you’d have to pay.

We should know from experience that many things once considered impossible have nonetheless come to pass.

to be successful in making loans over the long term, it is necessary to build up reserves for future losses during the good times.

there will continue to be cycles of good times and bad times, and the bad times will arise from mistakes made in the good times.

The most common beginning of disaster was a sense of security.

stability creates instability

There is nothing so disturbing to one’s well-being and judgment as to see a friend get rich. Even worse is to see your brother-in-law get rich! The previously conservative investors get to feeling that they are suckers to miss out. They decide that they want a piece of the action.

This is Pharaoh’s dream of the seven fat cows and the seven lean cows, which Joseph rightly interprets as seven good years followed by seven bad years.

What is the lesson? Financial cycles inevitably accompany economic life.