Branko Milanovic On The Financial Crisis

For Branko Milanovic, the root cause of the economic crisis is not just greedy bankers and deregulation but the enormous increase in inequalities over the past 25 years, worldwide:

This results in enormous capital that is not consumed (there is only so much conspicuous consumption one can engage in) and therefore is invested in search of the most profitable investments via intermediaries, that is, hedge fund investors, for instance.


2 thoughts on “Branko Milanovic On The Financial Crisis

  1. Yes, the crash was in part caused by unspent money looking for investments. But I’m skeptical that individual wealth accumulation was a major cause. We’re talking not about billions but about tens of trillions of dollars. You don’t get that kind of money from a relative handful of billionaires who can’t spend it all. My guess is that institutions — pensions funds, insurance companies, government central banks — swung much more weight. The amounts of money ithey had pursuing good returns dwarfed that of individuals.

    • Oh, no doubt about that. This enormous capital in search of high / quick returns also created a class of professionals dedicated to just that: generating high / quick returns, which in turn generates a certain mode of thinking that Matt Taibbi described in his latest blog post.

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