Are We in the Biggest Bubble in History?

Are we living through the biggest financial bubble in history — and does anyone in power know it? In this IEA event, Rt Hon Steve Baker FRSA and Max Rangeley present a joint case that decades of deficit spending, money creation and artificially low interest rates have inflated an asset bubble unprecedented in its scale and scope. Drawing on data from the OBR, the Bank of England and the OECD, Baker sets out the broad strategic context: from Nixon closing the gold window in 1971 and the collapse in the purchasing power of money, to the tripling of the UK money supply between 1997 and 2010, and the Government effectively printing its way through Covid.Rangeley then takes the argument further, showing how each recession since the late 1980s has been met with lower interest rates and larger debt bubbles — from the dot-com crash to the 2008 financial crisis to the present day, where total global debt has surpassed $300 trillion. Using original data on corporate productivity, zombie companies and asset valuations, he argues that this cheap credit has not driven investment and innovation but instead entrenched stagnation, priced young people out of housing, and suppressed birth rates across the developed world.Baker closes with a warning and a call to action. When this bubble bursts, he argues, it must not be misdiagnosed as a failure of free markets — it is the product of a centrally planned monetary system propping up a welfare state that cannot fund itself through taxation alone. The speakers urge economists, journalists and policymakers to undergo a paradigm shift in economic thinking before it is too late, and make the case that the choice ahead is not inevitable decline but one between collapse and renewal.The Institute of Economic Affairs is a registered educational charity. It does not endorse or give support for any political party in the UK or elsewhere. Our mission is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.The views represented here are those of the speakers alone, not those of the Institute, its Managing Trustees, Academic Advisory Council members or senior staff. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit insider.iea.org.uk/subscribe