In Chapter 5 we consider swindles and defalcations. It…
““In Chapter 5 we consider swindles and defalcations. It happens that crashes and panics often are precipitated by the revelation of some misfeasance, malfeasance, or malversation (the corruption of officials) engendered during the mania. It seems clear from the historical record that swindles are a response to the greedy appetite for wealth stimulated by the boom. And as the monetary system gets stretched, institutions lose liquidity, and unsuccessful swindles are about to be revealed, the temptation to take the money and run becomes virtually irresistible. It is difficult to write on this subject without permitting the typewriter to drip with irony. An attempt will be made.””
About This Quote
This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation.
Economic booms create greed, leading to fraud; when crises expose corruption, people feel compelled to flee with money.
In simple terms: Greed fuels fraud; crises reveal it, prompting escape.
Key Takeaway
Recognize and curb greed before crises.
Themes
economics
fraud
crisis
human behavior
history
Mood
cautious
analytical
critical
Type
historical
economic
When to use this quote
- financial markets
- policy making
- corporate governance
- public trust
- legal enforcement
Key Concepts
Speculative bubbles
moral hazard
systemic risk
Questions to Reflect On
- How can institutions reduce incentives for fraud?
- What safeguards prevent panic‑driven flight?
A Different Perspective
Not all participants are equally culpable; structural factors also drive misconduct.