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Written by
Satyajit Das
- Financial Times
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Monday, October 29, 2012
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In the film A Few Good Men, Colonel Nathan Jessup (Jack Nicholson) famously tells the military court: “You can’t handle the truth!” Today, politicians and policy makers seem unable to handle the truth – the prospect of little or no economic growth for a prolonged period. They refuse to acknowledge that expansionary fiscal and monetary policies may only provide temporary palliative relief, but cannot restore the health of the real economy.
Recent economic growth was driven by financialisation of the economy, primarily the use of debt to create demand. It also relied on allowing degradation of the environment and mispriced non-renewable natural resources, such as oil and water.
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