Overview

Just as contemporary economics failed to predict the 2008-09 crash, and over-estimated the subsequent brief recovery that followed, economists today are again failing to accurately forecast the slowing global economic growth, the growing fragility, and therefore rising instability in the global economy. This book offers a new approach to explaining why mainstream economic analyses have repeatedly failed and why fiscal and monetary policies have been incapable of producing a sustained recovery. Expanding upon the early contributions of Keynes, Minsky and others, it offers an alternative explanation why the global economy is slowing long term and becoming more unstable, why policies to date have largely failed, and why the next crisis may therefore prove even worse than that of 2008-09. Systemic fragility is rooted in 9 key empirical trends: slowing real investment; a drift toward deflation; money, credit and liquidity explosion; rising levels of global debt; a shift to speculative financial investing; the restructuring of financial markets to reward capital incomes; the restricting of labour markets to lower wage incomes; the failure of Central Bank monetary policies; and the ineffectiveness of fiscal policies. It results from financial, consumer, and government balance sheet fragilities exacerbating each other, creating a massive centripetal force disaggregating and tearing apart the whole, untameable by either fiscal or monetary means. This book clarifies how the price system in general, and financial asset prices in particular, transform into fundamentally destabilizing forces under conditions of systemic fragility. It explains why the global system has in recent decades become dependent upon, and even addicted to, massive liquidity injections, and how fiscal policies have been counterproductive, exacerbating fragility and instability. Policymakers' failure to come to grips with how fundamental changes in the structure of the 21st century global capitalist economy, in particular in financial and labour market structures, make the global economy more systemically fragile can only propel it toward deeper instability and crises. An appendix describes three simultaneous equations that express in notational form the variables associated with the Theory of Systemic Fragility.

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9780986076947

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forthcoming [Jack Rasmus' book] offers the most pertinent analysis of the stagnation trap I have seen. There are many steps to the analysis but it boils down to his Theory of Systemic Fragility. ... While Rasmus aims to provide a theory of system fragility, in the process his analysis gives an incisive account of the stagnation trap... Rasmus has made a signal contribution to contemporary economics and provided a vitally important X-ray of the political economy of stagnation. -- Jan Nederveen Pieterse, University of California Santa Barbara, in Perspectives Libres, 2016 Systemic Fragility in the Global Economy (2015) not only provides a theoretically-informed, empirically-grounded diagnosis but also offers a wide-ranging set of policy recommendations aimed at progressive movements... The case studies of the USA, Europe, Japan and China are excellent, typically contrarian, and highly teachable. Many important and provocative arguments and points are made in passing in these studies and they are strengthened by the more sustained theoretical analyses that follow. A major contribution is the analysis of the complexity of shadow banking, an ill-defined term of art in most of the literature. -- Capital & Class, Vol. 40, No. 2, June 2016 Systemic Fragility in the Global Economy offers a penetrating analysis of economic stagnation in advanced economies by providing a sustained and systemic focus on the role of finance, an analysis that probes further than mainstream economic analysis. Rasmus has made a signal contribution to contemporary economics and provided a vitally important X-ray of the political economy of stagnation.. Jan Nederveen Pieterse, University of California Santa Barbara, in Journal of Post Keynesian Economics, 2017 Systemic Fragility in the Global Economy (2015) ... not only provides a theoretically-informed, empirically-grounded diagnosis but also offers a wide-ranging set of policy recommendations aimed at progressive movements... The case studies of the USA, Europe, Japan and China are excellent, typically contrarian, and highly teachable. Many important and provocative arguments and points are made in passing in these studies and they are strengthened by the more sustained theoretical analyses that follow. A major contribution is the analysis of the complexity of shadow banking, an ill-defined term of art in most of the literature. -- Capital & Class, Vol. 40, No. 2, June 2016 This is a great book and the substantial effort it takes to read it is well worth it. It is both a compelling economic history and a call for change...Rasmus does describe the necessary tools to bring back a real economy of real jobs and real income growth for all but the lower 90% are so beaten, atomized, and misled that a global explosion on the level of the 1930's Great Depression is almost inevitable. David R. Baker, Business Reporter, San Francisco Chronicle

Author Information

Dr. Rasmus teaches economics and politics at St. Marys College in California. He is the author of several books on the USA and global economy, including Epic Recession: Prelude to Global Depression, 2010, Obama's Economy, 2012, and An Alternative Program for Economic Recovery, 2012. He hosts the weekly New York radio show, Alternative Visions, on the Progressive Radio network; is shadow Federal Reserve Bank chair of the 'Green Shadow Cabinet' and an economic advisor to the USA Green Party.

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