Macroeconomic stability will be more elusive and that will affect all of our lives: from the risks many will face in childhood.
ALAN M. TAYLORTo the security of employment at working age, to the challenge of accumulating for retirement.
More Alan M. Taylor Quotes
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Non-trivial understanding of the financial sector, credit, and the banking system.
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It’s just very hard to teach a class of students about what has happened in the Global Financial Crisis.
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Eventually the banking systems of all advanced economies reach magnitudes of 500 percent,
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Furthermore, this pattern is seen across all the advanced economies, and isn’t just a feature of some special subset (e.g. the Anglo-Saxons).
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In the immediate postwar era, financial crises in advanced countries were rare events, and before 1970 did not happen at all.
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To the security of employment at working age, to the challenge of accumulating for retirement.
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A possibility is that we see more and more leverage, and credit-to-GDP ratios rise once more to even higher levels.
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And we have never observed modern finance-capitalist systems operating over a sustained period at this kind of credit-to-GDP leverage ratio.
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The basic aggregate measure of gearing or leverage is telling us that today’s advanced economies’ operating systems are more heavily dependent on private sector credit than anything we have ever seen before.
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Then our economic future will be very different from our recent past.
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We have never in human history seen a run-up in credit of the kind we have just witnessed in advanced economies since 1970.
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More financial instability will introduce more uncertainty all down the line.
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If we have moved back to a regime of regular financial crises – like the one we had from the 1870s to the 1930s.
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Absent significant regulatory or tax changes, and a sharp transition could be disruptive.
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1000 percent or more of GDP, so that every economy starts to have financial systems that resemble recent cases like Switzerland, Ireland, Iceland, or Cyprus. That might be a very fragile world to live in.
ALAN M. TAYLOR