Manias, Panics, and Crashes: A History of Financial Crises by Charles Kindleberger

"Manias, Panics, and Crashes" is a book written by economist Charles Kindleberger that explores the history of financial crises throughout the world. The book details how the combination of irrational exuberance, easy credit, and government policies can lead to the formation of financial bubbles, which inevitably burst and cause panic and economic distress.

One example discussed in the book is the South Sea Bubble of 1720. The South Sea Company was a joint-stock company that was granted a monopoly on trade in the South Seas by the British government. Investors became convinced that the company's profits would be enormous, and the company's stock price soared. However, the company's profits never materialized, and the stock price eventually collapsed, causing widespread panic and financial ruin for many investors.

Another example is the Panic of 1837 in the United States. The panic was triggered by a combination of easy credit, over-speculation in land, and a downturn in the British economy that caused a decrease in demand for American goods. The panic led to a severe recession that lasted for several years.

The book also discusses the stock market crash of 1929, which led to the Great Depression. The crash was caused by a combination of over-speculation, easy credit, and a lack of government regulation. The crash caused widespread panic and led to a severe economic downturn that lasted for many years.

Overall, "Manias, Panics, and Crashes" provides a comprehensive overview of the history of financial crises and the factors that contribute to their formation. The book emphasizes the importance of government regulation and the need to avoid irrational exuberance and over-speculation in financial markets.