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Lost Decades

The Making of America's Debt Crisis and the Long Recovery

Menzie D. Chinn (Author, University of Wisconsin, Madison), Jeffry A. Frieden (Author, Harvard University)


A clear, authoritative guide to the crisis of 2008, its continuing repercussions, and the needed reforms ahead.

The U.S. economy lost the first decade of the twenty-first century to an ill-conceived boom and subsequent bust. It is in danger of losing another decade to the stagnation of an incomplete recovery. How did this happen? Read this lucid explanation of the origins and long-term effects of the recent financial crisis, drawn in historical and comparative perspective by two leading political economists.

By 2008 the United States had become the biggest international borrower in world history, with more than two-thirds of its $6 trillion federal debt in foreign hands. The proportion of foreign loans to the size of the economy put the United States in league with Mexico, Indonesia, and other third-world debtor nations. The massive inflow of foreign funds financed the booms in housing prices and consumer spending that fueled the economy until the collapse of late 2008. This was the most serious international economic crisis since the Great Depression of the 1930s.

Menzie Chinn and Jeffry Frieden explain the political and economic roots of this crisis as well as its long-term effects. They explore the political strategies behind the Bush administration’s policy of funding massive deficits with foreign borrowing. They show that the crisis was foreseen by many and was avoidable through appropriate policy measures. They examine the continuing impact of our huge debt on the continuing slow recovery from the recession. Lost Decades will long be regarded as the standard account of the crisis and its aftermath.

Book Details

  • Paperback
  • October 2012
  • ISBN 978-0-393-34410-3
  • 5.5 × 8.3 in / 304 pages
  • Sales Territory: Worldwide

Endorsements & Reviews

“An invaluable resource in a time of great uncertainty. Intelligent yet accessible to non-experts, [it] fills a valuable niche in a debate often dominated by ideological talking heads who thrive on popular anger and drain the political system of sensible dialogue.” — Jon Rosen, USA Today

“[An] important book, which deserves to be widely read and debated.” — Publishers Weekly

“An excellent read. [Chinn and Frieden] anticipated a movement like Occupy Wall Street.” — Occupy Wall Street Forum

“An integrated and compelling account of where our debts came from – and why they won’t go away any time soon. Chinn and Frieden combine the smartest kind of economics with the toughest kind of political science. Read this book for a somewhat disheartening but completely enlightening education – and then send 10 copies to the White House and Capitol Hill.” — Simon Johnson, MIT, co-author of 13 Bankers

“An intelligent, vivid, and accessible account of the first great crisis of the 21st century. Drawing on comparisons that will bother recalcitrant believers in American economic exceptionalism, the authors depict a gloomy panorama for the years to come unless policy makers get serious about fiscal reform. This is a must-read for the expert and the layman alike.” — Ernesto Zedillo, Director of the Yale Center for the Study of Globalization Former President of Mexico

“This wonderful book by two leading political economists identifies the roots of the recent financial crisis and the deep recession that followed, but more important, tells us what awaits us if we do not fix the underlying problems. It is political economy as it was meant to be - accessible and concise, even while deeply troubling.” — Raghuram G. Rajan, Booth School of Business, University of Chicago

“You will not read a better political-economic synthesis of America’s financial crisis than this book.” — Dani Rodrik, author of The Globalization Paradox

“Through pointed historical and comparative illustration, the authors show how financiers, politicians, and ideologues ushered in the crisis, and highlight the challenges we must overcome to avoid another lost decade.” — Nouriel Roubini, Stern School of Business, NYU

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