Kindleberger’s 1985 presidential address to the American Economic Association launched the final stage in his career, even as the 1985 Plaza Accord launched the next stage in the development of the dollar system. Kindleberger’s high hopes after Plaza were ultimately disappointed but, learning from the period after Nixon’s 1971 abdication of US leadership, he shifted his hopes instead to the prospect of “muddling through.”

Chapter 8 examines the land and stock market bubbles that occurred in Japan in the 1980s. In the seven years before its peak, the Japanese stock market appreciated 386 per cent. Similarly, land prices rose by 207 per cent. By August 1992, the Japanese stock market had fallen 62 per cent from its peak, and by 1995, land was 50 per cent below its peak. Both land prices and the stock market continued to fall into the next decade. The chapter then uses the bubble triangle to explain the Japanese land and stock bubbles. These bubbles were purely political creations. Not only did the Japanese government provide the spark, but it systematically cultivated all three sides of the bubble triangle with the explicit goal of generating a boom. This process was clearest in the realm of money and credit, where an expansion was both a central part of Japan’s economic policy and, after the Plaza Accord, an international commitment. The chapter concludes by looking at how the collapse of the Japanese bubbles weakened the country’s banking system, which eventually had to be rescued by the government, and resulted in a stagnant economy for over two decades.