If we have moved back to a regime of regular financial crises – like the one we had from the 1870s to the 1930s.
ALAN M. TAYLORIf we have moved back to a regime of regular financial crises – like the one we had from the 1870s to the 1930s.
ALAN M. TAYLORSince then they have occurred more often, and 2008 was the most damaging of them all to date.
ALAN M. TAYLORMacroeconomic stability will be more elusive and that will affect all of our lives: from the risks many will face in childhood.
ALAN M. TAYLORWe may end up with a world based more on equity than debt, or more on market debt instruments than bank intermediation; but how and why we get there is a mystery.
ALAN M. TAYLORThe 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.
ALAN M. TAYLORWe have never in human history seen a run-up in credit of the kind we have just witnessed in advanced economies since 1970.
ALAN M. TAYLORIn the immediate postwar era, financial crises in advanced countries were rare events, and before 1970 did not happen at all.
ALAN M. TAYLORTo the security of employment at working age, to the challenge of accumulating for retirement.
ALAN M. TAYLORNon-trivial understanding of the financial sector, credit, and the banking system.
ALAN M. TAYLORHow we ended up there and how we got to where we are today, without having some basic.
ALAN M. TAYLOREventually the banking systems of all advanced economies reach magnitudes of 500 percent,
ALAN M. TAYLORAbsent significant regulatory or tax changes, and a sharp transition could be disruptive.
ALAN M. TAYLORAnd we have never observed modern finance-capitalist systems operating over a sustained period at this kind of credit-to-GDP leverage ratio.
ALAN M. TAYLORFurthermore, this pattern is seen across all the advanced economies, and isn’t just a feature of some special subset (e.g. the Anglo-Saxons).
ALAN M. TAYLORMore financial instability will introduce more uncertainty all down the line.
ALAN M. TAYLORA possibility is that we see more and more leverage, and credit-to-GDP ratios rise once more to even higher levels.
ALAN M. TAYLOR