This question was adressed by a number of economists in the Summer 2024 edition of The Internationl Economy. William White (page 25) noted that the global economy is a complex, adaptive system and such systems often break down. We have had three major, global recessions since 1990 and they have all arisen from the financial sector. In each case, a sharp easing of monetary policy led to a debt buildup that then contributed to the next financial crisis as interest rates rose again. Moreover, the credit granted as a counterpart to this debt has increasingly been granted by non-regulated entities. We do not know who has lent to whom. Against this backdrop, we now seem likely to encounter a number of inflationary pressures arisisng from secular forces; demographics, deglobalisation, climate change etc. A future, global debt crisis now seems more than likely.
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