Indebtedness and Bailouts
Carmen highlights the crucial link between implicit guarantees and risk-taking behavior, noting that private debt often transforms into public debt following crises. She emphasizes that rising public indebtedness, driven by bailouts and government assumptions of debt, is a significant concern. The discussion also touches on the historical context of banking crises, particularly the unusual stability seen post-World War II, which contrasts sharply with the volatility of earlier periods.In this clip
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Carmen Reinhart on Financial Crises
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