The global economy is dominated by a private debt bubble that governments and mainstream economists ignore.
This debt bubble is the underlying cause of most of the world’s economic malaises—from massive unemployment in Europe to house price bubbles in England and Australia
The policy response has been to ignore this private debt bubble while obsessing about government debt; and to manipulate asset markets via Quantitative Easing in the hope this will inflate the real economy.
The outlook for the medium term is thus stagnation caused by private debt combined with asset market volatility. In particular:
o America is “Turning Japanese”; and
o China’s private-debt-financed bubble must burst in the next 2-3 years