Carmen Reinhart Quotes

Cuba, Economist
October 7, 1955

Carmen M. Reinhart is an American economist and the Minos A. Zombanakis Professor of the International Financial System at Harvard Kennedy School. Previously, she was the Dennis Weatherstone Senior Fellow at the Peterson Institute for International Economics. and Professor of Economics and Director of the Center for International Economics at the University of Maryland. She is a Research Associate at the National Bureau of Economic Research, a Research Fellow at the Centre for Economic Policy Research, Founding Contributor of VoxEU, and a member of Council on Foreign Relations. She is also member of American Economic Association, Latin American and Caribbean Economic Association, and the Association for the Study of the Cuban Economy. She became the subject of general news coverage when mathematical errors were found in a research paper she co-authored.

Of course, the problems of external default, domestic default, and inflation are all integrally related. A government that chooses to default on its debts can hardly be relied on to preserve the value of its country’s currency.

Carmen Reinhart
Perhaps more than anything else, failure to recognize the precariousness and fickleness of confidence - especially in cases in which large short-term debts need to be rolled over continuously - is the key factor that gives rise to the this-time-is-different syndrome. Highly indebted governments, banks, or corporations can seem to be merrily rolling along for an extended period, when bang! - confidence collapses, lenders disappear, and a crisis hits.

Carmen Reinhart
- Time
- Different
- Factor

As we mentioned in the preamble, banks’ role in effecting maturity transformation—transforming short-term deposit funding into long-term loans—makes them uniquely vulnerable to bank runs

Carmen Reinhart
The biggest threat to advanced economies is that debt will accumulate until the overhang weighs on growth.

Carmen Reinhart
- Debt
- Threat
- Economies
What is certainly clear is that again and again, countries, banks, individuals, and firms take on excessive debt in good times without enough awareness of the risks that will follow when the inevitable recession hits.

Carmen Reinhart
- Take
- Without
- Awareness
If there is one common theme to the vast range of crises...it is that excessive debt accumulation, whether it be by the government, banks, corporations, or consumers, often poses greater systemic risks than it seems during a boom.

Carmen Reinhart
- Common
- Risks
- Debt
Bubbles are far more dangerous when they are fueled by debt, as in the case of the global housing price explosion of the early 2000s.

Carmen Reinhart
- Dangerous
- Debt
- Bubbles
The essence of the this-time-is-different syndrome is...rooted in the firmly held belief that financial crises are things that happen to other people in other countries at other times; crises do not happen to us, here and now. We are doing things better, we are smarter, we have learned from past mistakes. The old rules of valuation no longer apply. Unfortunately, a highly leveraged economy can unwittingly be sitting with its back at the edge of a financial cliff for many years before chance and circumstance provoke a crisis of confidence that pushes it off.

Carmen Reinhart
- Time
- Different
- Happen

There is nothing new except what is forgotten.

Carmen Reinhart
- New
- Nothing
- Forgotten
More money has been lost because of four words than at the point of a gun. Those words are 'This time is different'.

Carmen Reinhart
- Time
- Different
- Money