Beyond the Keynesian Endpoint: Crushed by Credit and by Tony Crescenzi

By Tony Crescenzi

During the nice melancholy, mythical British economist Keynes encouraged utilizing govt cash to fill the commercial void until eventually buyer spending and company funding recovered. yet what occurs while governments cannot do this anymore? you've got arrived at "The Keynesian Endpoint": while the money has run out earlier than the financial system has been rescued. that is the place we're. Exhausted stability sheets depart coverage makers with few doable concepts to strengthen monetary progress; more and more, they aspect leaders and voters in the direction of brutal offerings that have been formerly incredible. in the meantime, traders fight to navigate unstable markets crushed via sovereign debt—and, as they do, they lose tolerance for economic recklessness.


In the U.S. and worldwide, debt-fueled spending courses devised to medication the worldwide monetary difficulty are actually morphing into poison. In Beyond The Keynesian Endpoint, PIMCO govt vp and industry strategist Tony Crescenzi illuminates the mounting sovereign debt main issue, dissects all of the many situations now swirling round it, and divulges the profound implications for governments, traders, and the realm economy.

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Extra resources for Beyond the Keynesian Endpoint: Crushed by Credit and Deceived by Debt — How to Revive the Global Economy

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Thank you to my old and new friends, Jackie Rubino, Neil Visoki, Tommy Scott, Jeanine Ognibene, John Barone, Diana Mangano, John Vito Pietanza, Ray and Debbie Candido, Dave Bochicchio, Phil Neugebauer, Mark Shorr, and Mark Porterfield. To all who, in one way or another, are survivors, and who, despite the many obstacles and challenges they face in their daily lives, each day find the inner strength to endure and indeed to excel. Table of Contents Introduction: Reaching the Keynesian Endpoint Chapter 1 Beware the Keynesian Mirage Chapter 2 The 30-Year American Consumption Binge Chapter 3 How Politicians Carry Out Fiscal Illusions, Deceive the Public, and Balloon Our Debts Chapter 4 The Biggest Ponzi Scheme in History: The Myth of Quantitative Easing Chapter 5 How the Keynesian Endpoint Is Changing the Global Political Landscape Chapter 6 Age Warfare: Gerontocracy Chapter 7 The Hypnotic Power of Debt Chapter 8 When Is Being in Debt a Good Thing?

Having tapped the last balance sheet, nations at the Endpoint will place burdens on many, including their citizens, trading partners, savers, and bond holders. They will do so by inflicting their pain over time, taking as long as is necessary to liquidate their debts. In so doing they will be spared the worst of the sovereign debt dilemma and avoid technical default, but they will experience sub-par economic growth over the longer term, resulting in low inflation, low policy rates, steep yield curves, low investment returns, and a weakening domestic currency.

Suppose also that the nation舗s budget deficit is 4% of GDP. The nation decides that in order to reduce its debt-to-GDP ratio it will inflate its way out. In doing so, it boosts its money supply growth to say 8%, thereby spurring an 8% overall increase in the economy, but at the expense of more inflation, which increases to a 5% annual pace. In five years, this nation will have seen its economy grow by 40% in nominal terms, and its debts will have increased by 20%, lowering the GDP ratio by 4% per year.

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