Since the financial crisis, ruling elites have bet the ranch on one thing: cheap credit. The idea is banks keep lending money they don't have. People go on borrowing and spending more. The problem is this approach is fundamentally wrong.
Monetary stimulus didn't start in 2007. Policymakers have been doing it since the mid-1980s. They tried it after the market crash in 1987. And again after the Asian financial crisis in 1997. And again after the collapse of LTCM in 1998. And again after the dotcom crash in 2000.
Every single time there has been a market correction, governments and central banks artificially inflated markets again – and provoked a worse correction to come.
Today's news shows people are expecting the same thing now. Pundits are asking not whether Janet Yellen will cut interest rates, but when.
We can't go on like this.
Credit does not exist to be a tool for officials to direct the economy. One person's credit should be another's savings, or deferred consumption.
The problem with the last 30 years of cheap money is that there is no correlation between credit and savings. Artificial credit is no one's deferred consumption.
The only thing cheap credit has created is malinvestment: buildings that should never have been built, businesses that should never have taken off, ventures that should never have been started.
Chronic malinvestment means there will eventually be an almighty day of reckoning. It could be now.
A good shorthand for the cheap credit orthodoxy is Osbrown economics: the monetary consensus of the political Establishment. The groupthink of the people who attend Davos.
When the day of reckoning comes, many will be looking for a way out. An alternative to the failed orthodoxy. That's why I wrote a paper called After Osbrown.
If you're writing an investor note in a City firm today, you could do worse than taking a look.
"A revolutionary text ... right up there with the Communist manifesto" - Dominic Lawson, Sunday Times
Printed by Douglas Carswell of 61 Station Road, Clacton-on-Sea, Essex