No One Saw This Economic Crisis Coming?

Interesting diagram separating the “financial economy” from the “real economy”. The impact of international capital flows doesn’t show up clearly in this model, but seems evident that Finance, Production and Consumption all need to grow in approximate proportion.

Asset bubbles would be growth in the FIRE sector without corresponding growth in production and employment to convert the FIRE sectors credit into interest paid.

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[From No One Saw This Economic Crisis Coming? — Seeking Alpha]

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