The High Rise Before the Fall

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Many Americans who have never driven in ol’ London town have driven over the London Bridge — in Arizona. I’m an outlier, here, in that I’ve been over many a London bridge, but not to Lake Havasu’s.

But that doesn’t make me an expert on the Shard London Bridge, a London skyscraper (yes, skyscraper) nearing completion. Popularly called “The Shard,” it will be the tallest building in Europe.

So prepare yourself: Expect a major economic collapse in the old country.

Yes, for the last century, the building of record-height skyscrapers could have served as a leading economic indicator . . . of disaster. As Mark Thornton explains, record-setting skyscraper construction is

a sign of a looming economic crisis. The model has successfully identified the Panic of 1907, the Great Depression, the Stagflation of the 1970s, the Tech Bubble, and the Housing Bubble.

In a scholarly paper on the subject, Thornton cautions not to use this strange correlation “as a guide to fiscal and monetary policy” or, superstitiously, an excuse to regulate “skyscraper heights . . . to prevent economic crisis.”

But the connection between building heights and boom-and-bust remains suggestive. Extra-big skyscrapers rise during extra-big booms, themselves fueled by central bank credit inflation. That is, inflation — and its usual consequences (which include unexpected deflation and financial collapse).

If only our central banks could maintain a stable money supply, rather than constantly tinkering with money to fine-tune the economy, our biggest buildings might not serve as such good predictors of our biggest economic downturns.

This is Common Sense. I’m Paul Jacob.

4 Comments so far ↓

  1. Sep
    7
    12:36
    PM
    Drik

    That we are overdone with banking institutions which have banished the precious metals and substituted a more fluctuating and unsafe medium, that these have withdrawn capital from useful improvements and employments to nourish idleness, that the wars of the world have swollen our commerce beyond the wholesome limits of exchanging our own productions for our own wants, and that, for the emolument of a small proportion of our society who prefer these demoralizing pursuits to labors useful to the whole, the peace of the whole is endangered and all our present difficulties produced, are evils more easily to be deplored than remedied.
    ___Jefferson 1810

  2. Sep
    7
    1:32
    PM
    Paul Jacob

    Nice quote, Drik. Thanks as always for your input and insights.

  3. Sep
    7
    3:18
    PM
    Chas

    Are you on drugs? The Central bank isn’t tinkering with money to better the economy, they are progressively executing the financial destruction of every country until they have everyone subservient to them.

  4. Sep
    7
    7:02
    PM
    Drik

    No. Thank you.
    So easy to launch from springboard you provide. High point of my day digging for an attempted pithy response.

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