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Niall Ferguson

Sam Harris speaks with Niall Ferguson about his new book The Square and the Tower
18 February 2018

They discuss his career as a writer, networks and hierarchies, how history gets written, the similarity between the 16th century and the 21st, the role of social media in the 2016 Presidential election, the influence of advertising on the public sphere, Trump, the Russian investigation, Islamic extremism, counterfactuals, what would have happened if Clinton had won the presidency, immigration in Europe, conspiracy theories, capitalism, globalization, communism, wealth inequality, universal basic income, Henry Kissinger, the prospect of a US war with China, cyberwar, and other topics

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Over the past four decades, globalization has enabled the transfer of millions of jobs from the US to various emerging-market countries.
It changed the relative value of capital and labor all over the world. The top earners started getting a larger share of their income from investments than from their labor. They own the “means of production,” and the producers did increasingly well from the ’70s forward.
Nobody paid much attention to the unevenly distributed benefits of globalization, until around 40 million Americans lost their jobs in the 2007–2009 recession. Now, the backlash has begun, and it’s not going to stop until the situation improves for those who have been left behind.
John Mauldin/Niall Ferguson January 2018

Niall Fergusson about Brexit
Speaking at the Milken Institute conference on the future of Europe in London, he said:
'I'm going to do something very unusual on these occasions, I'm going to admit that I was wrong.
also issued a scathing critique of the EU, which he said
'deserved Brexit' after failing on 'monetary union, foreign policy, migration policy, radical Islam policy'
Daily Mail 7 December 2016

In an astonishing reversal, he said he had been wrong and admitted he – and the rest of the elite – had failed to listen to voters concerned about immigration.

Brexit, he said, was the 'revolt' of provincial England.

The 52-year-old, who is a professor at Harvard in the US, also issued a scathing critique of the EU, which he said
'deserved Brexit' after failing on 'monetary union, foreign policy, migration policy, radical Islam policy'.

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US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941.
Niall Ferguson, FT February 10 2010

The dynamic interplay of networks and hierarchies that has led to the creation and destruction of economic systems in generations past… and will ultimately drive political outcomes in today’s unbalanced and rapidly changing global economic system.
Niall Ferguson, via John Mauldin, 11 June 2014

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Globalisation/Factor-price equalization - Faktorprisutjämning

Britain entering first world war was 'biggest error in modern history'
Historian Niall Ferguson says Britain could have lived with German victory and should have stayed out of war
The Guardian, 30 January 2014

Niall Ferguson, Western Civilisation: Decline – or Fall?
via Rolf Englund blog 9 March 2012

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Everyone knows how the Great Depression fuelled support for extremists on both the left and right. Less well known is the way
the original Great Depression – the one that began in 1873 and involved a quarter-century of deflation – led to a wave of populism on both sides of the Atlantic.
Causes dear to 1870s populists ranged from anti-Semitism to bimetallism. Nowadays anti-immigration and euroscepticism are more likely.
Niall Ferguson, FT April 18, 2014

In America, the financial crisis begat the Tea Party.

In organisational terms, European populism is more like the Mad Hatter’s Tea Party than the Boston tea Party.

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Mad Hatter’s Tea Party

Tebjudningen i Boston (på engelska: the Boston Tea Party)
kallas den händelse 1773 då amerikanska patrioter förstörde en stor telast tillhörigt Brittiska Ostindiska Kompaniet.
Det är den händelse som anses ha varit den utlösande faktorn för den amerikanska revolutionen.

Wall Street Chrashes

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BIS effective exchange rate indices
Today we live in a world of fiat money and mostly floating rates.
The last vestige of the gold standard was swept away in August 1971, when Richard Nixon suspended the convertibility of the dollar into gold.
For one country to accuse another of waging a currency war in 2013 is therefore absurd.
The war has been going on for more than 40 years and it is a war of all against all
Niall Ferguson, Financial Times January 25, 2013

Back in the 1930s, it was obvious who was waging a currency war. Before the Depression, most countries had been on the gold standard, which had fixed exchange rates in terms of the yellow metal. When Britain abandoned gold in September 1931, it unleashed a wave of competitive devaluations. As economist Barry Eichengreen argues, going off gold was the essential first step towards recovery in the Depression. Floating the pound not only cheapened British exports; more importantly, it allowed the Bank of England to pursue a monetary policy focused on domestic needs. Lower interest rates helped generate recovery via the housing market.

In any case, it’s not a single nominal exchange rate that really matters.
The Bank for International Settlements calculates far more meaningful real effective exchange rates, which take into account all the different economies with which a country trades and, crucially, changes in relative prices.

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One nation (under Germany)
Historian Niall Ferguson tells Ben Laurance the single currency will survive
and the crisis will leave Berlin heading a federal Europe

"I am not a federalist," he says. "But the costs of the single currency disintegrating are really so high...!
Ben Laurance, via John Mauldin 20 May 2012

The financial historian Niall Ferguson, visiting London from his self­imposed exile in America to promote the paperback version of his most recent book, is typically confident that he has the answers to these difficult questions — and they are not what you might expect from this tireless proponent of free markets.

As he begins his energetic deconstruction of the euro's prospects, he wants to remind us that he was deeply and publicly sceptical of its creation in the first place. "I was a staunch opponent of the single currency in the Nineties," he insists. "I wrote a piece predicting that in 10 years the single currency would suffer a crisis a bit like this because of the lack of fiscal integration."

Such prescience is now a bit of a problem for the Scot, who holds posts at Harvard, Stanford and Oxford universities and is never self­ effacing at the best of times. "My impulse is to gloat," he admits. "My impulse is to dance with the glee at having been right."

However, he is not dancing, because he predicts only one way out of the present crisis — for the euro countries to go the full federalist hog and adopt a single fiscal system. This is not the outcome he would have chosen.

"I am not a federalist," he says. "But the costs of the single currency disintegrating are really so high and would impact so many people, that the only responsible thing for me to do is to argue urgently for the next step to a federal Europe. I see no alternative at the moment that isn't a great deal worse."

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Niall has never shied away from addressing the big questions. His latest tour de force, Civilization: The West and the Rest (just released in paperback in the UK, as Civilization: The Six Killer Apps of Western Power), demonstrates how Europe went from being a fractious, disease-ridden fourteenth-century backwater to global dominance, through the development of six "killer applications": competition, science, democracy, medicine, consumerism and the work ethic — and is now experiencing a precipitious decline (along with the rest of the West).


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Welcome to Europe, 2021.
Brussels has been abandoned as Europe's political headquarters. Vienna has been a great success.
"There is something about the Habsburg legacy," explains the dynamic new Austrian Chancellor Marsha Radetzky.
"It just seems to make multinational politics so much more fun."
The Germans also like the new arrangements. "For some reason, we never felt very welcome in Belgium,"
recalls German Chancellor Reinhold Siegfried von Gotha-Dämmerung.
Niall Ferguson, 21/11/2011

Niall Ferguson talks about the European debt crisis,
Germany's outlook and European Central Bank policy
Bloomberg, Dec. 6, 2011

See video here

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”Mordet på EU-expressen”
”Vem dödade Europa?” frågade historikern Neil Ferguson i Newsweek
Han jämförde spelet runt den kraschande euron vid en Agatha Christie-deckare
Katrine Kielos, ledare Aftonbladet 30 juni 2011

Because of the way the European Monetary Union was designed,
there is in fact no mechanism for a bail-out of the Greek government
by the European Union, other member states or the European Central Bank (articles 123 and 125 of the Lisbon treaty).
Niall Ferguson, FT February 10 2010

The End of the Euro
How the crisis in Greece could lead to the demise of Europe's most ambitious project.
Alarming is the exposure of other EU banks to Greek debt, which totals $193 billion
Niall Ferguson NEWSWEEK May 7, 2010

Gold has a future, of course — but mainly as jewellery,” wrote Niall Ferguson, the financial historian, in 2001.
His judgment was, on the face of it, unfortunately timed. Gold has since proved spectacular as an investment and not only as an adornment.
The Times, editorial 20 August 2011

The two great issues of the age, Niall Ferguson believes, are how a handful of Western countries came to dominate the world,
and whether their domination is now threatened by the rise of Asia.

The Economist print Mar 10th 2011

Not one to shrink from epic questions, Mr Ferguson, a British historian, has written a dazzling history of Western ideas that sets out to provide the reader with epic answers. Broadly speaking, he is more successful in explaining the West’s triumph than in forecasting its fate.

Civilization: The West and the Rest. By Niall Ferguson. Allen Lane; 402 pages; £25. To be published in America by Penguin Press in November; $35. Buy from

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Today’s Keynesians have learnt nothing
Niall Ferguson, FT July 19 2010

To those of us who first encountered the dismal science of economics in the late 1970s and early 1980s, the current debate on fiscal policy in the western world has been – no other word will do – depressing.

In its caricature form, the debate goes like this:

The Keynesians, haunted by the spectre of Herbert Hoover, warn that the US in still teetering on the brink of another Depression. Nothing is more likely to bring this about, they argue, than a premature tightening of fiscal policy. This was the mistake Franklin Roosevelt made after the 1936 election. Instead, we need further fiscal stimulus.
RE: See 1937

The anti-Keynesians retort that US fiscal policy is already on an unsustainable path.

The Keynesians retort by pointing at 10-year bond yields of around 3 per cent: not much sign of inflation fears there!

The Keynesians say the bond vigilantes are mythical creatures. The anti-Keynesians (notably Harvard economics professor Robert Barro) say the real myth is the Keynesian multiplier

In some ways, of course, this is not an argument about economics at all. It is an argument about history.

In 1981 the US economist Thomas Sargent wrote a seminal paper on “The Ends of Four Big Inflations”. It was in many ways the epitaph for the Keynesian era.

Those economists, like New York Times columnist Paul Krugman, who liken confidence to an imaginary “fairy” have failed to learn from decades of economic research on expectations. They also seem not to have noticed that the big academic winners of this crisis have been the proponents of behavioural finance, in which the ups and downs of human psychology are the key.

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Krugman versus Ferguson: Round Two
Not since Ken Rogoff’s famous attack on Joe Stiglitz has the dismal science of economics provoked such pompous, self-important, personalised squabbling.
The reality is that nobody knows what cutting the deficit into a weak economic recovery is going to do to output and jobs
Jeremy Warner, The Daily Telegraph, 20 July 2010


On first reading I found myself greatly puzzled by Niall Ferguson’s claim that: “It was [the second world war] that saw the US (and all the other combatants) embark on fiscal expansions of the sort we have seen since 2007. So what we are witnessing today has less to do with the 1930s than with the 1940s: it is world war finance without the war ... ”

In 1942 the US ran a federal budget deficit of 14.8 per cent of GDP; in 1943 30.8 per cent; in 1944 23.3 per cent; and in 1945 22.0 per cent – a four-year average deficit of 22.7 per cent of GDP.

Brad DeLong July 19 2010


The great austerity debate

Behavioural finance

Keynes - Krugman

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What we in the western world are about to learn is that there is no such thing as a Keynesian free lunch. Deficits did not “save” us half so much as monetary policy – zero interest rates plus quantitative easing – did.

First, the impact of government spending (the hallowed “multiplier”) has been much less than the proponents of stimulus hoped.

Second, there is a good deal of “leakage” from open economies in a globalised world.

Last, crucially, explosions of public debt incur bills that fall due much sooner than we expect
Niall Ferguson, FT February 10 2010

The realisation that the yawning US current account deficit was increasingly being financed by Asian central banks, with the Chinese moving into pole position, was, for me at least, the eureka moment of the decade.
As I reflected on the rise, and probable fall, of America’s empire, it became clear to me that there were three fatal deficits at the heart of American power
Niall Ferguson December 27 2009

A manpower deficit (not enough boots on the ground in Iraq),
an attention deficit (not enough public enthusiasm for long-term occupations of conquered countries)
and above all a financial deficit (not enough savings relative to investment and not enough taxation relative to public expenditure).

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How to take moral hazard out of banking
Niall Ferguson and Laurence Kotlikoff, FT December 2 2009

As Dubai World’s default shows, the financial crisis is far from over. Surprise, surprise, among the creditors with the biggest exposure is Royal Bank of Scotland – a reminder that reckless lending by supersized banks was a global phenomenon. Taxpayers are entitled to ask for a radical reform of banking regulation to ensure they will never again have to foot huge bills for financial folly. So far, there is only one credible proposal.

In a recent speech in Edinburgh, Mervyn King, the governor of the Bank of England, called for “utility banking”, which would limit banks to their legitimate purpose – financial intermediation and payment facilitation – as opposed to gambling with taxpayers’ money.

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Moral Hazard

In the two years after Silicon Valley's dot-com bubble peaked in August 2000, the US stock market fell by almost half.
It was not until May 2007 that investors in the Standard & Poor's 500 had recouped their losses.
Then, just three months later, a new financial storm blew up, this time in the credit market... as millions of American households discovered they could not afford to service billions of dollars' worth of subprime mortgages.
Niall Ferguson, The Ascent of Money(Penguin, 2008) p. 284

'Prophets of doom' will be right in the end
Rolf Englund, Financial Times, June 5 2007

I den mycket läsvärda The Ascent of Money konstaterar historikern Niall Ferguson att vid första kvartalet 2006 bestod en tiondel av de amerikanska hushållens köpkraft av pengar som de fått via ökad belåning av huset. PJ Anders Linder, SvD 25/1 2009

Hubris is defined as haughty behavior by people who are arrogant enough to think they might rank up there with the gods. It's a bad attitude that inevitably leads to a fall.
It's the perfect word for a decade in which Wall Street experts and company chiefs told us they knew what was best for our money while proving they knew very little.
And that's giving the benefit of the doubt to many titans of profitless dot-coms, CEOs of shell companies such as Enron and WorldCom, and the Wall Street geniuses who engineered the credit crunch. No doubt more than a few of them knew exactly what they were doing to us.
The less-than-zero decade
A decade ago, historians debated what to call these years -- the '00s, the Oughts or the Zeros. For investors, it's been the less-than-zero decade.
It kicked off at the most boisterous phase of the tech bubble, just before the Nasdaq Composite Index ($COMPX) reached a dizzying peak of 5,132 in March 2000. In 2002, the index bottomed at 1,114. Nearly a decade later, it still sits almost 3,000 points below the peak.
The Dow Jones Industrial Average ($INDU) and the Standard & Poor's 500 Index ($INX) have done much better comparatively. They're down only about 10% to 20% for the decade.
Michael Brush, MSN Money, 18/11 2009

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Why a Lehman deal would not have saved us
Niall Ferguson, FT September 14 2009

We are living through the painful end of an age of leverage which saw total private and public debt in the US rise from about 155 per cent of gross domestic product in the early 1980s to something like 342 per cent by the middle of this year
Once, monetarism and Keynesianism were considered mutually exclusive economic theories. So severe is this crisis that governments all over the world are trying both simultaneously.
Niall Ferguson,Financial Times, December 18 2008

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History lesson for economists in thrall to Keynes
On Wednesday last week, yields on 10-year US Treasuries rose above 3.73 per cent.
Once upon a time that would have been considered rather low. But the financial crisis has changed all that:
at the end of last year, the yield on the 10-year fell to 2.06 per cent.
In other words, long-term rates have risen by 167 basis points in the space of five months.
In relative terms, that represents an 81 per cent jump.
Niall Ferguson, Financial Times May 29 2009

It is a brave or foolhardy man who picks a fight with Mr Krugman, the most recent recipient of the Nobel Prize for Economics. Yet a cat may look at a king, and sometimes a historian can challenge an economist.
A month ago Mr Krugman and I sat on a panel convened in New York to discuss the financial crisis. I made the point that “the running of massive fiscal deficits in excess of 12 per cent of gross domestic product this year, and the issuance therefore of vast quantities of freshly-minted bonds” was likely to push long-term interest rates up, at a time when the Federal Reserve aims at keeping them down.

De haut en bas /From top to bottom/ came the patronising response: I belonged to a “Dark Age” of economics. It was “really sad” that my knowledge of the dismal science had not even got up to 1937 (the year after Keynes’s General Theory was published), much less its zenith in 2005 (the year Mr Krugman’s macro-economics textbook appeared). Did I not grasp that the key to the crisis was “a vast excess of desired savings over willing investment”? “We have a global savings glut,” explained Mr Krugman, “which is why there is, in fact, no upward pressure on interest rates.”
Now, I do not need lessons about the General Theory . But I think perhaps Mr Krugman would benefit from a refresher course about that work’s historical context.

It is hardly surprising, then, that the bond market is quailing. For only on Planet Econ-101 (the standard macroeconomics course drummed into every US undergraduate) could such a tidal wave of debt issuance exert “no upward pressure on interest rates”.
Of course, Mr Krugman knew what I meant. “The only thing that might drive up interest rates,” he acknowledged during our debate, “is that people may grow dubious about the financial solvency of governments.”

Might? May? The fact is that people – not least the Chinese government – are already distinctly dubious.

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Comment by Martin Wolf

Comment by Robert Skidelsky

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Noted historian Niall Ferguson warns that a geopolitical shock, such as a wider Mideast conflict, could dry up financial liquidity and shut global stock exchanges, as happened at the start of World War I.
Barron's 15/3 2007

At 42, Niall Ferguson has become one of the world's most famous and provocative historians, with high-profile posts ranging from Harvard to Oxford to Stanford University's Hoover Institution.

While hardly alone in discussing risk, Ferguson offers fresh historical perspective. One of his key themes is the economic, social and political parallels between the world today and on the eve of World War I. The period from 1880 to 1914, which he calls "the first age of globalization," has more in common with our own time than "any other intervening period," he says.

Ferguson is fascinated by what he calls the "paradox of diminishing risk in an apparently dangerous world." By that, he means ebullient global stock markets and record-tight yield spreads between risk-free U.S. Treasurys and junk bonds and emerging-market debt. He also cites an abiding faith in the ability of the Federal Reserve and other central banks to rescue the investment community from any potential financial crisis.

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We are living through the painful end of an age of leverage which saw total private and public debt in the US rise from about 155 per cent of gross domestic product in the early 1980s to something like 342 per cent by the middle of this year
Once, monetarism and Keynesianism were considered mutually exclusive economic theories. So severe is this crisis that governments all over the world are trying both simultaneously.
Niall Ferguson,Financial Times, December 18 2008