Steven Pearlstein: The global economy comes to the end of its string

By Steven Pearlstein,
WashPost
Published: August 4

Why is this happening?

Short answer: Because we never really fixed underlying structural problems in the U.S. and global economies that had been building for decades and caused the financial and economic crisis in 2008.

Those problems included a U.S. economy that was living well beyond its means, consuming more than it produced. They included an Asian economic boom that relied on intentionally undervalued currencies that led to massive buildup of dollar reserves and a massive credit bubble in the United States. And they included a new European system with a single currency and a single monetary policy but not the single economy that is needed to go along with it.

Since the crash in 2008, the strategy of economic policymakers has been to flood the global economy with monetary and fiscal stimulus, with governments ramping up deficit spending and central banks printing money and injecting it into the financial system.

The stimulus accomplished its short-term objective of ending the panic and stabilizing the global economy.

(More here.)