In August 2005, the world's most influential economists gathered at Jackson Hole to celebrate Alan Greenspan's tenure at the Federal Reserve. They congratulated themselves on conquering the business cycle itself. They called it the Great Moderation. One economist warned them they were wrong—that the complex instruments they celebrated were hiding catastrophic risks. Lawrence Summers called him a Luddite. The audience applauded.
Three years later, the global financial system experienced exactly the crisis that economist had predicted.
This is the story of how the brightest minds in human history spent thirty years building a machine designed to explode. From the tributary loans of ancient Mesopotamia to the mortgage-backed securities that destroyed Lehman Brothers. The mathematical models that promised to eliminate risk. The incentive structures that rewarded hiding it. The groupthink dressed in tuxedos.
Intelligence itself can be the most dangerous delusion of all.