This Time Is Different: 8 key ideas
The core ideas of This Time Is Different, each in under a minute, written in our own words. Want the full depth? Get the book.
- IDEA 1 OF 8
Every boom claims it is different
Reinhart and Rogoff study financial crises across eight centuries and many countries.
They argue that before each crash, people convince themselves that old rules no longer apply, which they call the this-time-is-different syndrome.
- IDEA 2 OF 8
Governments default far more than expected
The authors show that governments failing to repay their debts is common in history, not rare.
Many countries that are rich today defaulted repeatedly in earlier centuries. Default, in their account, is a normal part of financial history.
- IDEA 3 OF 8
Banking crises strike rich and poor
The authors find that banking crises happen in wealthy and developing countries alike.
Rich nations, in their data, are not immune to the same booms and busts seen elsewhere. Similar warning signs appear in each case.
- IDEA 4 OF 8
Inflation is a hidden default
The authors describe how governments have reduced the real value of their debts by debasing coins or printing money.
They treat high inflation as another way of failing to repay what is owed.
- IDEA 5 OF 8
Some countries tolerate less debt
The authors introduce debt intolerance, the idea that countries with a history of default can get into trouble at much lower debt levels than others.
Lenders lose faith in them sooner.
- IDEA 6 OF 8
Defaulters often repeat
The authors identify serial defaulters, countries that have failed to repay many times.
They argue that escaping this pattern takes a long period of good behaviour and trust building. Their records show such patterns lasting for centuries.
- IDEA 7 OF 8
Crises leave long scars
The authors find that after severe banking crises, house and share prices fall for years, unemployment rises and government debt grows sharply.
Recovery is usually slow. The damage often lasts far longer than people first expect.
- IDEA 8 OF 8
Data beats confident stories
The authors built a large historical database to test claims about crises.
They argue that careful numbers from the past are a better guide than confident stories about why the present is special.
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