1. Beware the Keynesian Mirage

Those who refer to historical examples where fiscal stimulus worked and where despite increased indebtedness there was no corresponding increase in market interest rates do so with contempt toward the financial crisis and its profound message about overleveraged societies and the extended period by which the deleveraging process tends to last and leave destruction in its wake. Reinhart and Rogoff,1 for example, suggest that the deleveraging process that follows a financial crisis tends to last about ten years. McKinsey & Company find similar results, as shown in the summary in Table 1-1:2

Table 1-1. Duration and Extent of Deleveraging Following a Financial Crisis

The source of this contempt almost certainly is ...

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