I think the rise of quantitative econometrics and a highly mathematical approach to risk management was the obverse of a decline in interest in financial history.
Interpretation
The quote suggests that an increased focus on quantitative methods in finance has led to a diminished appreciation of financial history.
Niall Ferguson's quote reflects on the shift in financial practices, where the growing emphasis on quantitative econometrics and mathematical models for risk management has overshadowed the lessons and insights that can be gained from studying financial history. This indicates a potential danger in prioritizing numerical analysis over historical context, which could lead to a lack of understanding of past mistakes and patterns in finance.
In practice
In a financial conference discussing the importance of understanding past market crashes.
It's all very well for us to sit here in the west with our high incomes and cushy lives, and say it's immoral to violate the sovereignty of another state. But if the effect of that is to bring people in that country economic and political freedom, to raise their standard of living, to increase their life expectancy, then don't rule it out.
If the financial system has a defect, it is that it reflects and magnifies what we human beings are like. Money amplifies our tendency to overreact, to swing from exuberance when things are going well to deep depression when they go wrong. Booms and busts are products, at root, of our emotional volatility.
Civilisation is partly about restraining the male of the species from engaging in the violence of the hunter-gatherer period. But it doesn't take an awful lot to unleash it.
For 500 years the West patented six killer applications that set it apart. The first to download them was Japan. Over the last century, one Asian country after another has downloaded these killer apps- competition, modern science, the rule of law and private property rights, modern medicine, the consumer society and the work ethic. Those six things are the secret sauce of Western civilization.
The West may collapse very suddenly. Complex civilizations do that, because they operate, most of the time, on the edge of chaos.
Over time, the welfare state has become dysfunctional in a surprising way. But in a way it became a victim of its own success: It became so successful at prolonging life, that it becomes financially unsustainable, unless you make major changes to things like retirement ages.
I think that the discovery of antimatter was perhaps the biggest jump of all the big jumps in physics in our century.
We are all agreed that your theory is crazy. The question which divides us is whether it is crazy enough to have a chance of being correct. My own feeling is that it is not crazy enough.
We need to start thinking about the future of food if we are going to feed 9 billion people in a way that does not destroy our environment.
That we can now think of no mechanism for astrology is relevant but unconvincing. No mechanism was known, for example, for continental drift when it was proposed by Wegener. Nevertheless, we see that Wegener was right, and those who objected on the grounds of unavailable mechanism were wrong.
Every mode of transport that we use - whether it's planes, trains, automobiles, bikes, horses - is reusable, but not rockets. So we must solve this problem in order to become a space-faring civilization.
There must be enormous numbers of planets around the stars in the many galaxies in our observable universe. We may be sure that wonderful things are happening on these planets that the human race never will observe.
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