My gut reaction is that there is something missing here in this analysis despite the truth of all that is said by Adair Turner.



I perceive a reorganisation of humanity around the knowledge economy. So there has been greater urbanisation particular around centres with strong education and universities. The planning laws have stifled housing developments and infrastructure investments. Especially as a population ages and craves more conservation of old buildings and ways but also environmental concerns regarding preservation of habitats and vested interests making money from rent seeking on existing assets.



Banks and investors seeking growth have struggled to invest into innovative new assets and today's knowledge industries driving down the price of intellectual property being heavily deflationary for instance in music, advertising, film, etc per unit. In lieu of this money is pouring into existing property and financial assets, causing bubbles between valuations based on future cash flows (utilisation) and asset values (ownership).



Deflation exported from China will further depress prices. Whilst the money to pay for all these items is locked into offshore accounts and financial assets rather than redistributed through the tax systems to those to whom it would have the most benefit to quality of life.



So simply resetting debt levels may only reset a broken system and prevent some of the reforms needed to drive higher levels of quality of life. This will be critical to solve as increasing numbers of the world are at retirement age and they realise that the low interest rates were a transfer to rent seekers and banks to protect their businesses from going bust already. When they need to sell will there be enough sellers to liquidate assets to pay for health care will they have enough to maintain quality of life expectations?







