The Warning Sign That Predicted Nearly Every Modern Financial Crisis: Richard Vague
June 17, 2019 by Jane Wollman Rusoff
The predictor of virtually every major financial crisis during the last 200 years has been runaway private debt fueled by lending institutions and their leaders’ fierce ambition, according to Richard Vague, founder and managing partner of the venture capital firm Gabriel Investments.
In an interview with ThinkAdvisor, the former banker discusses his years-long research into these crises, which culminated in a new book, “A Brief History of Doom: 200 Years of Financial Crises” (University of Pennsylvania Press-May 2019).
Vague’s detailed analyses of 43 financial calamities in six of the biggest countries worldwide over two centuries show that lending misbehavior sparking rapid, excessive private-loan growth and subsequent overcapacity has been, unfailingly, the prelude to these meltdowns.
What’s more disconcerting is that the long-term global trend is toward ever-higher levels of private-sector — household and business — debt. Indeed, in a May 20 speech, Federal Reserve chair Jerome Powell expressed concern over growing business debt. “Could the increase in business debt pose greater risks to the financial system than currently appreciated?” he asked. “My colleagues and I continually ask ourselves that question.”
Click HERE to read the full story via ThinkAdvisor.