El-Erian argues that, forced to take on massive policy responsibilities with inevitably partial tools, central banks only managed to put a band-aid on the consequences of the Great Recession,[1] and that a continued period of low-growth and financial repression is not sustainable for much longer.
The current path being our pursued – or what he labeled back in 2009 as the "new normal" – will likely end within the next three years; and to illustrate this, the book identifies the mounting tensions and inherent contradictions that are becoming more visible at the domestic, regional and global levels.
[2] Providing details, El-Erian suggests fixing the Great Recession for good will entail a four-pronged approach: fostering economic growth through structural reforms; encouraging greater balance in aggregate demand, including more inclusive access to consumption; implementing debt reduction in areas where crippling debt overhangs are destroying potential; and spearheading global coordination of economic policy..[1] Some policy measures include "revamping the education system, strengthening infrastructure, improving labour competitiveness and flexibility, while simultaneously closing tax loopholes and increasing marginal tax rates on the wealthy in order to reduce inequality.
His new book, "The Only Game in Town: Central Banks, Instability and Avoiding the Next Collapse” (Random House), is an excellent primer on how we got here and what to expect as the world struggles to cope with slower, less equal growth and the resulting populism, nationalism and ugly partisan politics that we see in countries from the U.S. to France to China.
While central banks "averted tremendous human suffering", he argues that they have failed to generate what the Western world really needs—"the combination of high, durable and inclusive growth together with genuine financial stability".
[3] Publishers Weekly It is suggested the main thesis of the book was "well-informed, if sometimes overstretched," but they criticized its forays into "trendy but less relevant territory with references to "cognitive diversity" and quotes from Sheryl Sandberg.