A tightly argued, informative review of recent financial developments that also offers a conceptual framework for drawing lessons from them. The relentless logic of financial globalization, according to the authors, will lead to the internationalization of financial regulation and the creation of a global lender of last resort. Financial markets are intrinsically fragile, since the key actors base their decisions on guesses about how other investors will behave. As a result, the globalization of financial markets has produced in many countries a cautious monetary policy that introduces deflation, depresses economic growth, and imposes unnecessary costs when crises occur. The U.S. economy stands out as an apparent exception -- but remains vulnerable (in the authors' view) due to its large current-account deficit and an assumed unwillingness of foreigners to buy U.S. securities based on consumer debt. Useful progress has been made in building an international framework for official cooperation, but any recent improvements are likely to be overwhelmed by the next crisis. The authors therefore propose a World Financial Authority, based on recent developments in the Bank for International Settlements, through which central banks could pool information and reach consensus. This and other suggestions make this concise book forward-looking and controversial.