The world’s advanced economies are trying to keep their balance on an unstable platform of high consumption, asset prices and household debt as we enter the 2020s. Any significant shock or increase in volatility could trigger “doom loops” that compromise the economic and financial systems.

The great recession ended more than a decade ago. In recent years, personal consumption augmented by government deficit spending has underpinned growth. Rising employment helped people purchase more. But with wage growth low, borrowing against buoyant housing and stock prices was a major factor in consumption. Central bank and government policies that engineered high asset prices and collateral values allowed scope for additional borrowing...

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