The Crest of a Wave

discipline. With hindsight, our capital cycle approach has failed at times when we have underestimated the impact on industries of political and legal interference, disruptive technologies and globalisation.

Financial history has not ended, any more than political history ended with the fall of the Berlin Wall. But the next financial crisis will not be like the last one. It will not be triggered by defaults in US subprime mortgages, nor transmitted round the world by under-capitalized banks. It will be different because no two financial crises are ever

The most important question addressed in this book is whether a capitalist economy can function properly without market-determined interest.

The world’s governments thus find themselves in an ever-shrinking box. And all it will take to trigger the crisis is a return to historically-normal levels of interest rates. As recently as 2000, 30-year Treasury bonds yielded over 6 percent and 30-year mortgages cost 7.5 percent. Let rates return to those levels and the global financial system imp