Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis by Anatole Kaletsky

Author:Anatole Kaletsky [Kaletsky, Anatole]
Language: zho
Format: epub
Tags: #genre
ISBN: 9781586488710
Publisher: PublicAffairs
Published: 2010-06-22T18:59:12+00:00

CHAPTER FIFTEEN

What—Me Worry?

Bull markets climb a wall of worry.

Bear markets slide down a slope of hope.

—A venerable investment adage

THE MAIN RISKS to the world economy and the global system in the years after the 2007-09 crisis can be classified into three groups. The first group consists of the short-term economic threats that could still abort the global recovery and cause a double-dip recession but will probably be dispelled before the end of 2010. The second set of risks are medium-term issues that are likely to dominate public policy in the three to five years after the crisis: excessive government deficits; paralyzed banking systems; a need to rebalance global growth, especially between America and China, and between Germany and southern Europe, and a possible return to the stagflation of the 1970s, with inflation and unemployment rising at the same time. Although these are all serious worries, they will probably prove more manageable than expected in the new politico-economic environment of Capitalism 4.0, as the next chapter explains. Finally, several long-term challenges, such as climate change, the cost of welfare programs for aging populations, and breakdowns in global governance and coordination, are likely to become even more daunting in the coming decades.

This chapter looks at the first set of widely feared financial problems that could still abort the global economic recovery in 2010 or 2011: rising interest rates, monetary inflation, and currency crises.

These financial dangers were all exaggerated in the aftermath of the crisis, and they are unlikely to damage global growth in the early years of the new decade. Thus, the resilience of the postcrisis economy financial markets will probably continue to offer favorable surprises. The world economy and financial markets will surprisingly continue to perform strongly because interest rates all over the world will remain lower for much longer than expected.

But isn’t the reduction of interest rates to near zero worldwide an unhealthy and unsustainable aberration? Won’t this long period of ultrastimulative monetary policy create dangerous inflationary pressures? And is it not inevitable that the blatant resort to printing money by governments, especially in the United States and Britain, will destabilize the dollar, the pound, or the global currency system? The answer to all these questions is almost certainly no. But the reasons for downplaying worries about monetary policy, inflation, and currency instability will become apparent only as the market fundamentalist doctrines of the precrisis period are replaced by a new understanding of macroeconomic policy in Capitalism 4.0.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.