Chapter 9 was originally written for the first edition of this book. It set forth a series of financial reforms necessary to prevent another financial crisis. While some of those reforms were adopted, many were not. Moreover, some of those that were adopted led to unintended consequences such as negative interest rates and market illiquidity. Clearly, additional reforms are needed to address continuing problems such as pro-cyclical monetary policy, ineffective or non-existent fiscal policy, an unproductive tax code, shrunken military spending in the face of rising geopolitical threats, a broken immigration system, and a variety of other areas.
The United States is at a tipping point as it faces a global economy far more leveraged than on the eve of the financial crisis and a geopolitical landscape far more fractured and unstable than at any time since the end of the Cold War. America has a choice: It can continue to pursue failing policies or adopt new ones that will actually have a chance of solving the challenges staring it in the face.
The single most important economic problem facing the world—and the single greatest obstacle to future prosperity and stability—is the $200 trillion of debt that is crushing economic growth and sapping the world’s financial and intellectual capital. We are spending money we don’t have. The world economy cannot continue borrowing from the future without triggering another financial crisis in the near future.