GOVERNMENT INTERVENTION - SOURCE OR SCOURGE OF MONETARY ORDER

Charles Kindleberger argues that most, if not all, financial manias, p anics, and crashes were market failures deriving from the irrational b ehavior of human actors. Both his notion of rationality and his interp retation of the sources of financial crises are open to question. A br oader notion of rationality enables us to distinguish actual crises fr om cases of fraud or entrepreneurial error, and a closer look at finan cial history illustrates the ways in which government regulation, not human irrationality, has been the source of financial disorder.