The World Economy: Why people still feel nervous…

Despite showing good signs of health for the first time in a long time, people continue to feel anxious about the state of the world’s economy.

Interviewed by the IEA’s Kate Andrews, Head of Education Dr Steve Davies explains what he believes to be the two-folded reason for this: First, the insecurity of China’s banking system, which has produced unsustainable bubbles that are bound to burst at some point. Second, the state of the world’s money system, including the extended use of quantitative easing and low interest rates, which have also created their own set of bubbles, particularly in real estate.

Steve argues that this can’t go on forever, and if another recession hits, both central banks and governments are in a weak position to deal with lackluster economies.

Steve thinks there may be an opportunity to sort out debts, and to create an era of more geo-political stability.

But this may take getting through a recession, which would take a combination of luck and good policy making.

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