Banking Crisis Roots examines the recurring instability within the U.S. banking system, linking it to economic policies implemented after the Bretton Woods agreement and subsequent inflationary pressures. The book argues that monetary policy evolution, financial deregulation, and increasing global financial flows have collectively fostered conditions conducive to banking crises. It challenges the notion that these crises are isolated incidents, instead attributing them to systemic vulnerabilities created by post-Bretton Woods policies. The analysis highlights how the abandonment of fixed exchange rates, coupled with deregulation, incentivized risk-taking behavior and asset bubbles.
The book unfolds in three distinct parts, beginning with the historical context, tracing monetary policy from the gold standard to the present day. It then analyzes the impact of deregulation on banking practices, examining how the removal of regulatory constraints fostered competition and risk-taking. Finally, it explores the role of globalization in amplifying these trends, focusing on capital flows' impact on asset prices and financial stability. By examining the interplay between monetary policy and financial stability, the book offers a comprehensive perspective on the underlying forces shaping the banking system.
