The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse by Mohamed El-Erian

PART I

THE WHY, HOW, AND WHAT OF THIS
BOOK

CHAPTER 1

SETTING THE STAGE
“Like ancient doctors, who tried to explain the
causes of diseases while knowing nothing about
germs or bacteria, academics sought to describe the
functioning of developed economies while ignoring
the financial sector and the risks it contained.”
—FERDINANDO GIUGLIANO
This is a pivotal moment for the global economy. Our
romance with the financial service industry—“finance”—has
come crashing down in the midst of loud recriminations.
With trust broken and the blame game continuing, it is
simply not feasible to restore a close and warm relationship,
and any relationship that does survive certainly shouldn’t be
as intimate and exclusionary as the one that prevailed in the
run-up to the 2008 global financial crisis. Yet breaking up is
also not an option. The interconnectedness and
interdependencies among real economies and the financial
system are too deep for them to ever go their own separate
ways—and so their interaction is still critical in determining
growth, jobs, and financial stability.
Recognizing the importance for both current and future
generations of establishing a better working relationship
between global economics and global finance, central banks
have been working overtime since the global financial crisis

The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse by Mohamed El-Erian