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The essays in this volume explain the key structural features of financial inflation that give rise to financial crisis. These features include excessive reliance on finance to maintain economic activity through rising asset prices. Reliance on asset inflation induces a preoccupation with property values and a new social divide between the asset-rich and the asset-poor that undermines the culture of the welfare state. When debt can no longer be supported by cash flow from asset markets, excess debt plunges economies into economic depression.
Introduction; 1. Why the World Economy Needs a Financial Crash; Part I. The Economics of Financial Inflation; 2. Money in Globalised Times; 3. Neo-liberalism and International Finance; 4. Financial Innovation: Better Machines for Financial Inflation?; 5. The Inflation of Goodwill; 6. Leverage and Balance Sheet Inflation; 7. Inflation in Financial Markets; 8. Asset Inflation and Deflation; Part II. The Culture of Financial Inflation; 9. Twentieth-Century Finance Theory: The Frauds of Economic Innocence (in memoriam J. K. Galbraith); 10. Fischer Black’s ‘Revolution’; 11. Economic Inequality and Asset Inflation; 12. The Wisdom of Property and the Culture of the Middle Classes; Part III. Financial Crisis; 13. Everything You Need to Know about the Financial Crisis but Couldn’t Find Out Because the Experts were Explaining It; 14. The Limitations of Financial Stabilisation by Central Banks; 15. International Business and the Crisis; 16. Developing Countries in the Crisis Transmission Mechanism; Epilogue; Notes; Index