Dr. Eswar Prasad

So I was going to make the argument that perhaps we're just in a somewhat rocky transition phase to a new, more stable economic order.

And I was going to write a book about all the forces that would push us back towards this new, more stable equilibrium.

Unfortunately, Dennis, I worked through in my mind each of these forces.

I came to the conclusion that, in fact, we might be heading towards a world where instability becomes the norm.

Let's take globalization, for instance.

You know, it was supposed to create common shared interests because everybody, every country would benefit from globalization.

But in fact, what we are seeing

is that globalization's benefits seem to have been very unevenly distributed between countries and even within countries.

So this has created what I refer to in the book as the politics of resentment, where there is a sense that the global economic and political elites are able to get all the benefits from globalization, while the common man is left with all the pain.

So the concept of the doom loop is that domestic economics

politics and geopolitics have gotten stuck in this very negative feedback loop and in the book other than globalization i think about other forces like the middle powers like india that could be fostering more stability perhaps the rules of the game mandated by institutions like the united nations or the international monetary fund or even technology could be a leveling force but as i went through each of these potential stabilizing forces i argue in the book that in fact

they have unfortunately become perverted to become elements of instability.

Now, as you said, Dan, this is not a very cheerful book, but to my mind, it is very important, first of all, to understand why we are where we are, what are the forces that got us here before we can start thinking about solutions.

So maybe the solutions will be in the next book.

That's a tough question, because at one level, I think enlightened regulators understand that there needs to be some space for innovation and innovation inherently does bring with it certain risks.

So the question is how one arrives at the right balance, because one does need to think about issues like consumer protection, investor protection and so on.

And the key question is whether one can think about limiting risks rather than avoiding them completely.

So for instance, if you think about the financial system, one wants to make sure that systemic risks can at least be contained so that even if one financial institution does something particularly risky, perhaps because it is trying something innovative, that doesn't bring down the entire financial system with it.

The other complication with the regulation, of course, is that things like the internet, cryptocurrencies, AI, they know no borders.

So national borders are not really relevant.