engleski

Structural Imbalances and Financial Crises Proliferation

This article deals with fundamental concepts that are the prime cause of financial crises proliferation such as fractional reserve banking system, overleveraging and structural imbalances created in such a fashion. It examines this issues in a completely new manner shedding the light on their alternative interpretation which contrasts conventional wisdom. Unchecked money supply is characterized as a main problem that causes overleveraging which in turn reinforces property bubbles. The pattern of economic growth that is heavily dependant on rising debt is completely unsustainable. Inflation and increased taxes in order to serve public debt obligations under privately-owned fractional reserve banking system are not only its by-products but also vital components. The very logic of compound interest problem causes spiraling debt which cannot be supported by constant economic growth that is limited against finite nature of Earth's natural resources. Pending reform of the present monetary system is a key to the solution of most contentious issues in the global economy.

structural imbalances; fractional reserve banking system; financial leverage; financial sector; financial crises; sustainable economic growth

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