The lessons of past financial crises are quickly forgotten in the pursuit of profits from "summary" of A Short History of Financial Euphoria by John Kenneth Galbraith
The history of financial crises is a recurring theme throughout the ages. Time and time again, we witness the same pattern - a period of prosperity followed by a sudden and catastrophic collapse. Despite this, the lessons of past financial crises seem to be quickly forgotten in the pursuit of profits. When the economy is booming, people tend to become complacent. They are blinded by the allure of quick gains and fail to see the warning signs of an impending crisis. Greed takes over, and rational thinking goes out the window. It is during these times that risky investments are made, and financial bubbles are inflated to dangerous levels. As the bubble grows, so does the collective delusion that "this time is different." People convince themselves that the rules of economics no longer apply, and that they have discovered a new paradigm for eternal prosperity. However, history has shown us time and time again that there is no such thing as a free lunch in the financial world. When the inevitable crash comes, it is often swift and brutal. Investors who were riding high on the wave of euphoria suddenly find themselves drowning in a sea of losses. The same people who were once so confident in their investment strategies are now left wondering how it all went so wrong. In the aftermath of a financial crisis, there is always a period of reflection and introspection. People vow to never make the same mistakes again and promise to learn from the lessons of the past. However, as time passes and the economy begins to recover, memories fade, and old habits resurface. The cycle then repeats itself, with a new generation of investors falling prey to the same traps that ensnared their predecessors. The lessons of past financial crises are quickly forgotten in the pursuit of profits, and the cycle of boom and bust continues unabated. It is a sobering reminder that human nature is a powerful force that is not easily tamed.
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