Combating the Debt Addiction

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A presentation held by Ph.D. Ulf Dahlsten at Global Utmaning's and the Swedish House of Finance's seminar "Combating the Debt Addiction" at the Stockholm School of Economics, Thursday May 22, 2014.

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Combating the Debt Addiction

  1. 1. COMBATTING THE DEBT ADDICTION Ulf Dahlsten At the Stockholm School of Economics 22 March 2014
  2. 2. MUCH MORE NEEDS TO BE DONE TO STABILIZE THE FINANCIAL SYSTEM  Extreme pro-cyclicality  Endogenous risks are underestimated  Excessive money creation  Growing private debts  Asset inflation  The system has become extremely complex and inter-connected  Lack of transparency, uncontrolled third-party-risks  Maturity mismatches  Too many incentives in favour of risk-taking  Global imbalances are not addressed
  3. 3. THE FOCUS TODAY IS ON  Extreme pro-cyclicality  Endogenous risks are underestimated  Excessive money creation  Growing private debts  Asset inflation  The system has become extremely complex and inter-connected  Lack of transparency, uncontrolled third-party-risks  Maturity mismatches  Too many incentives in favour of risk-taking  Global imbalances are not addressed
  4. 4. QUESTIONS Do we have an excessive money creation? How dangerous is the build-up of private debt? How to curb asset inflation without depressing the economy? What can the central bank, the macro- prudential regulator Finansinspektionen and the political level do?

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