Teenagers. Have you ever tried giving advice to a teenager? It’s nigh on impossible. They won’t learn from the mistakes you made, they just have to make them afresh, all over again. The thing is, you might moan about teenagers, but don’t forget, you were one once, too, and you weren’t good at listening to your Mum and Dad’s warnings either.

So, what has that got to do with the economy? Well, the answer is, rather a lot. The way teenagers can’t learn from us, explains the real reason why we are having a credit crunch, and it probably explains a good deal besides, including why empires end, why wars happen, and why the battle against global warming is going to be so hard to win.

But to explain why, first consider these words uttered by a certain Alan Greenspan, yesterday.

It is appears the maestro, as he was once called, got it wrong. That’s not just the opinion of his many detractors, it is also his own opinion. He admitted it yesterday. “I was shocked,” he told a congressional committee, “because I’d been going for 40 years or more with very considerable evidence that it was working exceptionally well.”

What was his error? Was it that he cut interest rates too low; was it that he encouraged subprime lending; should he have done all he could to prick the US debt/property bubble? Well, Mr G hasn’t owned up to any of those things. But he has admitted to one error – a partial error, as he magnanimously calls it – which was that he should have done more to encourage the regulation of derivatives.

“If we are right 60 percent of the time in forecasting, we are doing exceptionally well; that means we are wrong 40 percent of the time,” said the sprightly pensioner. “Forecasting never gets to the point where it is 100 percent accurate.”

But it seems the big problem was this. Greenspan had 40 years of experience – a lifetime of experience – but as he put it, the financial crisis is a “once-in-a-century credit tsunami.”

So, it appears that Mr G, just like teenagers, made the mistake of not learning from previous generations.

In that sense he is just like the turkey. Nassim Nicholas Taleb tells the story of the turkey well in his book The Black Swan. Every day, the turkey gets happier because it is given a slightly bigger meal than the day before. And this continues. Imagine a graph plotting the creature’s happiness. It just goes up and up. Then one morning, its happiness reaches a new high as it enjoys its best meal to date. But then, the graph plotting its happiness crashes, it tumbles all the way to zero, for the turkey is dead. For that day of initial happiness happened to be Thanksgiving Day.

Bertrand Russell first came up with the idea. He called it the problem of induction knowledge, and in his example related the experience of a chicken. “The man who has fed the chicken every day throughout its life at last wrings its neck instead, showing that more refined views as to the uniformity of nature would have been useful to the chickens,” wrote Russell. 

But this lesson is all rather ironic when you consider these words from Alan Greenspan in his book, The Age of Turbulence: “History is replete with waves of self-reinforcing enthusiasm and despair, innate human characteristics not subject to learning curves.”

They say history repeats itself. That all we have to do is look back in history to predict the future. Churchill once said that: “the further backward you look, the further forward you can see.” So, if Greenspan had instead taken into account the US banking crisis of 1907, he would have foreseen this disaster.

But consider the people of Pompeii. They had lived in the shadow of Vesuvius for generations. If they had listened more attentively to their grandparents, they would have been none the wiser. They had no way of knowing how dangerous their situation was. When the sky went black, they looked around in wonder. Some even saw it as a good omen. Their history had never seen its like. Then it rained fire, and even the most optimistic began to question.

Do you remember Erich von Däniken? He was that guy who tried to persuade us the statues on Easter Island were made by men from outer space. The truth was altogether more alarming.

The indigenous population of that island followed a religion that required the erection of statues. To transport the stone the statues were made from, wood was required. Quite fortuitous, really, because the island was awash with trees, a veritable forest in the South Pacific.

The snag was, each tribe on the island tried to outdo the other, building ever-bigger statues. Presumably the island had its own answer to Greenpeace, and some “heretics” warned that the building craze could not last, and yet, even when there was just one tree left, it was knocked down. The end result was, of course, disaster, and the island population imploded.

There was no precedent for that disaster. If anything, the big mistake made by the people of Easter Island was to follow the practice of generations.

History is random. It does not repeat itself at all. It is just that occasionally circumstances conspire to throw up similarities. That is why Mark Twain was closer to the truth than Churchill when he said: “History never repeats itself, but it rhymes.”

The real lesson of the finance crisis is this. Never assume a practice that works for a while will carry on working. If history has one common thread, it is that if we blindly repeat the practice of the past we run into crisis. That is why the Sumerian civilization ended – or the Empire of Ancient Athens was forced into a war it could not win. Both cultures engaged in deforestation for generations, until they could no longer sustain themselves. That is why Andrew Jackson, the US President of 1830 once said: “What good man would prefer a country covered with forests and ranged by a few thousand savages to our extensive Republic, studded with cities, towns, and prosperous farms.” Yet, the creation of the dust bowl of Oklahoma was the very result of putting Jackson’s plan into practice.

When Mr Greenspan calls the current finance crisis a one-in-a-hundred-years event, he is wrong.

The world has changed, for good. Despite what the historians would have you believe, there are no precedents for today’s crisis, and no past answers for the other challenges of today. Lessons maybe, but there has never been anything like it.

The world’s population boom, the way ideas can be communicated across the world at the speed of light: these phenomena are unique. And the most dangerous thing we can do is apply the practice of the past.