Richard Sylla: 70% to 80% Chance of Another Global Financial Crisis

(From Sprott Money)

When Janet Yellen, Chairman of the US Federal Reserve, said in June that she does not expect another financial crisis in our lifetime, eyebrows were raised.

None more so than Richard Sylla’s.

Sylla, a professor emeritus at the Stern School of Business and co-author with Sydney Homer of the magisterial A History of Interest Rates, has studied past business cycles. He is thus able to put today’s events in a broader context.

“A lot of the same things are going on right now as before the 2008 crisis,” said Sylla, who puts the probability of a repeat, in our lifetimes, at between 70% and 80%…

…Sylla’s warnings are particularly important as America’s public schools and universities teach students almost nothing about history. That applies to economics professors, who focus almost exclusively on econometrics models.

Few economics programs teach detailed courses about the German and French hyperinflation episodes (which led to the rise of Hitler and Napoleon), let alone about Greek and Roman financial history.

Economics academics thus head confidently into government often without a clue as to the damages that fiat money and low interest rates can cause.

The upshot is that the US and other global governments and central banks have been systematically following the same high taxation, spending and money printing policies that in the past have led to disaster.

The prevailing assumption remains that “this time is different.”

It never is.

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