The Doomsday Machine

I am attaching a document

Self_Organized_DoomsdayMachine

describing the idea I presented on Tuesday about the role of the financial system in decoupling saving from real economy.

Here is the slide

SchemeFSGlobal

It is a short paper I wrote together with Paolo Tasca who at the time was doing his PhD with me.  We did not further develop the concept but I think it’s very relevant to GSS, because if we do not understand how this decoupling can be mitigated, it will be very difficult to address global issues effectively.

I think there are some objections to the approach used in the paper around the issue of internalizing externalities and I would be happy to hear them.

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