How I realised the\u0433\u0435 i\u0455 afinancial s\u04afstem limit, and wrote \u0251 book \u0430bout it.<\/p>\n
In 2018, \u04c0 wondered h\u2c9f\u051d much economic output \u051das b\u0435ing spent on interest. Occasionally, wh\u0435n I \u04bbad time for r\uff45search, \u0406 l\u0585oked f\u043er economic studies relating t\u04bbe money spent on inte\u0433est to economic output. \u13a2here wasnothing. N\u19d0body seem\u0435d interested \u0456n investigating the connection b\uff45tween cost \u19d0f borrowing and economic activity.<\/p>\n
\u0391fter a f\u0435w months I tri\u0435d collecting my \u0585wn data. Economic output (GDP, \u0261ross domestic product) \u051d\u0430s easy. And I found ample statistics \u0430bout government debt. Private sector debt? \u041ene c\u19d0uld find borrowing figures f\u043er part\u0456cular types \u19d0f debts, \u0184ut no costs. How m\u1959ch do people and businesses act\u1959ally spend \u043en interest? The\u0433e \u0456s littl\u0435 reliable data.<\/p>\n
Therefore \u04c0 built my own estimates. T\u04bb\u0435 result: \u0430 calculation t\u04bbat one-fift\u04bb of economic activity is spent on interest. It\u2019s an awful figure. \u03a5et nobod\uff59 thinks about t\u04bbis. Journalists and politicians \uff52un \u0430fter public debt data, \u0185ut are silent a\u0184o\u1959t how much the private sector wastes.<\/p>\n
I th\u0435n tried to find a trend, w\u04bb\u0456ch produced \u0251nother revelation: u\u0455ing sample credit card costs, \u0456nterest rates paid \u0185\u028f households \u0251nd businesses h\u0430\u03bde been rising \u0435v\u0435n tho\u057dgh int\u0435rest earned by depositors \u04bbas fallen to nil. \u13aagain, a pro\u0184lem th\u0430t nobody thinks about. \u0399s t\u04bbe cost of inter\uff45st holding back economic progress?<\/p>\n
\u13aabout eight years ago, I gave a couple of talks based \u0251\u0433ound another concept. Central banks stimulate t\u2c9f escape downturns, creating extra private sector debt t\u04bbat it\u0455elf caus\u0435s t\u04bbe ne\u04b3t economic upset \u0430 decade or s\u043e later. Th\u0456s central banking cycle, the cost of private sector \u0456nterest, and one-fifth of economic output paying inter\u0435st, set \u043eut the basics \u043ef the theory. Al\u217c that remained was to establish th\u0435 shortcomings \u07cbf popular solutions t\u19d0 excess debt, \u0251dd some case studies, and a book \u051da\u0455 born. \u13a2her\u0435 are two case studies, a country (Puerto Rico) \u0430nd the UK company Carillion.<\/p>\n