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Satyajit Das

The World Needs Shock Therapy

The only way the leaders gathered at the G-20 are going to revive growth is through radical and painful restructuring. 

Savers will have to take a hit. 

Savers will have to take a hit. 

Photographer: Alberto Pizzoli/AFP/Getty Images

While any global meeting that involves Donald Trump has the capacity to surprise, one thing is virtually certain about this weekend’s G-20 summit in Osaka, Japan: The gathered leaders will issue a pious call to work together to shore up growth, trade and the global financial system. The challenge they face is much bigger than that, however. And good intentions aren’t going to solve it.

The central question is how to restore reasonable levels of growth within resource and environmental constraints. Advanced economies are trapped in what John Maynard Keynes in 1931 called a “semi-slump” -- a torpor marked by low inflation, modest and inconsistent growth, and unstable financial markets sustained by endless monetary easing. Investors seem strangely content with this situation. Indeed, bad economic news is now taken as good news, since it presages more central bank easing.