August 4, 2014 – Charles Calomiris, professor with the Columbia University School of International and Public Affairs, joins Tom Woods on his show to discuss “Fragile by Design: The Political Origins of Banking Crises and Scarce Credit.” Calomiris co-authored the book, which covers why so many banking systems are unstable in certain countries and not others.
During the interview, Calomiris offered this explanation:
Banking crises don’t happen everywhere and always. And, in fact, in some countries, they never happen. And in other countries, they happen quite frequently. The most obvious examples are the U.S. and Canada where, over the last couple of centuries, the U.S. has had about 17 major banking crises and Canada has had zero. Canada is a more volatile, primarily exporting-dependent economy than the U.S. It’s a democracy. It started under British rule like the U.S. It has a lot in common with the U.S. in many ways. We use the same language. They can even travel among us undetected. But, somehow, despite the fact that they have more banking credit relative to GDP, not less, and that they are a more volatile economy, they don’t have banking crises and we do.
What are your thoughts on the numerous bank crises our country has faced? Share them in the comments below!