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Date: 2025-02-10 Page is: DBtxt001.php txt00000263

New Economics
INET interview with Andrew Sheng, Summer 2011

VIDEO Andrew Sheng talking about economics

If you like Fox News you probably will not like this interview. This is a very thoughtful discussion of lessons that need to be learned from the experience of real economics both during the Asia crisis and now the recent housing bubbles and global financial crisis.

Andrew Sheng - Sustainability Requires Caging Godzillas


Andrew Sheng is currently the Chief Adviser to the China Banking Regulatory Commission and Adjunct Professor at Tsinghua University. His latest book: From Asian to Global Financial Crisis: An Asian Regulator's View of Unfettered Finance in the 1990s and 2000s


Financial business is creating credit without limit until a crisis occurs. That’s the fundamental flaw which caused the current crisis, says Andrew Sheng in this INET interview. He also worries that the destruction of the tropical forest and other threats to the biosphere have the same character of ungovernable excesses until a crisis occurs.

Sheng says that what he learned about free markets at university - and what he practiced until 2008 - he now views as an intellectual dead-end. He believes that the takeover of private debts and zero-interest rate policies by governments around the world are both attempts to postpone the business cycle. He calls large complex financial institutions that move financial capital around the globe ungovernable Godzillas. These are a few of the many firm judgements coming from the Chief Adviser to the China Banking Regulatory Commission.

The world economy would see the mother of all crises, Sheng warns, if governments fail at managing the leveraged capital that is flowing into emerging markets these days. He also talks about the Chinese-American policy dialogue, that China needs to accept that with greater economic strength comes greater responsibility; and the world needs to respect that China, because of its size, is sailing into unknown territory.

You can engage all these ideas by watching the interview on video


Comments from the INET website

Submitted by Mira on Wed, 06/29/2011 - 11:46am.

Our monetary system is based on credit or debt, and without constantly continuing issuance of debt, the whole thing falls apart. Our system of ‘fractional reserve banking’ gives commercial banks a licence to literally create money out of thin air – and then charge interest on the money they created. Fractional reserve banking is the cause of spiralling debt.

A public campaign has started to end fractional reserve banking, and I recommend readers to look at the www.Positivemoney.org.uk website which explains further and support the campaign.



The text being discussed is available at http://ineteconomics.org/video/andrew-sheng-sustainability-requires-caging-godzillas
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