The financial system limit brings with it a political system limit.

Politicians need to recognise that there are no easy answers, no policy levers that can solve the dilemma of ‘expand now and add to stagnation in about ten years, versus do not stimulate and risk immediate stagnation,’ which is explained in the book.

What led politicians to make our financial worse? Economics originated as a political and social discipline but has somehow lost its way buried in the detail of microeconomics. The old rule of ‘stimulate your way out of recession’ was fine when debt levels were much lower, nowhere near the feasible limits, and therefore credit could expand without anyone worrying about the consequences.

As noted, for a period that ended nearly forty years ago, that expansion caused negative real interest rates. Now, after seventy-five years of the post-war consensus, in which every recession has been resolved by economic stimulus, the economic cycle driven by central banks keeps bumping up against the financial system limit. Central banks are now the victim of their past policies. The Fed, and other central banks, need to keep on stimulating so that more credit can pay the interest cost of earlier debt creation. The alternative is to crash the economy, which nobody wants. The financial system limit and political system limit are intertwined.

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