Understanding “The Rise of Carry”: A Critical Analysis of Volatility, Risk, and Financial Instability in Global Markets – Book Review

Abstract

This book review critically examines The Rise of Carry: The Dangerous Consequences of Volatility Suppression and the New Financial Order of Decaying Growth and Recurring  Crisis by Tim Lee, Jamie Lee, and Kevin Coldiron (McGraw-Hill, 2020). The authors present a compelling thesis on the rise of “carry trades” and how their proliferation contributes to systemic fragility within modern financial systems. This review explores the central themes of volatility suppression, distorted incentives in monetary policy, and the long-term macroeconomic consequences of a financial system increasingly reliant on stability as an illusion. The review offers a scholarly assessment of the book’s empirical foundations, its theoretical contributions, and its relevance for academics and policymakers interested in macro-financial stability. It also reflects on the implications of “carry dynamics” during post-crisis monetary regimes and considers how the book adds to the broader literature on speculative bubbles, market-based risk, and financial globalization.