The Illusion of the Perpetual Money Machine

The Illusion of the Perpetual Money Machine; Didier Sornette & Peter Cauwels (Notenstein Academy White Paper Series, January 2013)

We argue that the present crisis and stalling economy continuing since 2007 have clear origins, namely in the delusionary belief in the merits of policies based on a “perpetual money machine” type of thinking. Indeed, we document strong evidence that, since the early 1980s, consumption has been increasingly funded by smaller savings, booming financial profits, wealth extracted from house price appreciation and explosive debt.