Ending the Financial Illusion In Defense of Real Growth Publication date : September 7, 2022
Jacques de Larosière has spent his entire career at the head of financial institutions. He led the International Monetary Fund from 1978 to 1987, before becoming governor of the French central bank from 1987 to 1993, then president of the European Bank for Reconstruction and Development from 1993 to 1998. He is a member of the French Academy of Moral and Political Sciences and the author of several books, including 40 ans d’égarements économiques (2021) with Editions Odile Jacob.
Jacques de Larosière returns to a theme close to his heart: the dangers of public debt and facile monetary policy, which reduce long-term investments and increase inequality.
The “financial illusion” is the belief that creating money is the same thing as creating resources, which makes the value of financial assets enormously distorted compared to manufactured goods.
The financialization of the economy is particularly onerous given the need for long-term investments if the world is to transition away from fossil fuels and combat climate change. The system also benefits the wealthiest 10% of the population while disadvantaging wage workers.
De Larosière explains how to stimulate real growth by encouraging productive investments, and how to advance social justice by making the most privileged pay a fair share towards creating a more just and efficient economy.