Latest Issue

Back to school: top economists on what their subject needs to learn next

From clipping the wings of the property market to re-assessing the place of the banks, our big brains nominate one lesson they wish their colleagues would learn

By Prospect Team   May 2018

Larry Summers: Get to grips with vicious cycles

The central lesson of 21st century economic experience is that modern economies are not self-equilibrating systems. Indeed, modern economies are often dominated by positive feedback effects that destabilise. Margin calls, bank runs, portfolio insurance, option hedging all cause more selling of assets as their values go down. When selling causes lower prices, which cause more selling, the market mechanism is in trouble. We now understand how it can give way to long-term economic problems such as secular stagnation, where excessive saving…

Register today to continue reading

You’ve hit your limit of three articles in the last 30 days. To get seven more, simply enter your email address below.

You’ll also receive our free e-book Prospect’s Top Thinkers 2020 and our newsletter with the best new writing on politics, economics, literature and the arts.

Prospect may process your personal information for our legitimate business purposes, to provide you with newsletters, subscription offers and other relevant information.

Click here to learn more about these purposes and how we use your data. You will be able to opt-out of further contact on the next page and in all our communications.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

We want to hear what you think about this article. Submit a letter to

More From Prospect