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When the Money Runs Out
Book

When the Money Runs Out

The End of Western Affluence

Stephen D. King
Yale UP, 2014

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Editorial Rating

8

Qualities

  • Comprehensive
  • Background

Recommendation

In this “mixture of economics, politics and history,” economist Stephen D. King inches toward the conservative side with his attitudes and analysis of government debt and stimulus. King shares a concern with other observers that the financial crisis, quantitative easing and contemporary economic circumstances are leading to “schisms” in society. He answers the call for a 1930s-like stimulus by noting that governments have already shot more stimulus bolts than President Franklin Roosevelt, who faced a different situation, ever did. King encompasses a wide range of references – economic history, Japan and Argentina, economist Ludwig von Mises’s “illusory prosperity” concept, the late-1990s Asian crisis, and the contrasting fortunes of different generations – in order to ask a telling question: What are the consequences when foreigners come to feel less confident in Western finances and want more hard assets in debt repayment? King’s most exciting argument is in favor of nominal GDP targeting, perhaps the next big policy idea in coming years. getAbstract recommends his rich exegesis as an intelligent, concerned contribution to the financial debate.

Take-Aways

  • Stimulus policies like quantitative easing can become “more painkillers than cures.”
  • Quantitative easing inflated the values of equities and other assets, but its efforts to stimulate Main Street economic activity and growth have had disappointing results.
  • Economists and policy makers repeatedly exhibit hubris before financial crises strike.

About the Author

Stephen D. King, HSBC group chief economist, writes for The Financial Times and The Times.

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