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When the Money Runs Out: The End of Western Affluence
The Western world has experienced extraordinary economic progress throughout the last six decades, a prosperous period so extended that continuous economic growth has come to seem normal. But such an era of continuously rising living standards is a historical anomaly, economist Stephen D. King warns, and the current stagnation of Western economies threatens to reach crisis proportions in the not-so-distant future. Praised for the “dose of realism” he provided in his book Losing Control , King follows up in this volume with a plain-spoken assessment of where the West stands today. It’s not just the end of an age of affluence, he shows. We have made promises to ourselves that are achievable only through ongoing economic expansion. The future benefits we expect—pensions, healthcare, and social security, for example—may be larger than tomorrow’s resources. And if we reach that point, which promises will be broken and who will lose out? The lessons of history offer compelling evidence that political and social upheaval are often born of economic stagnation. King addresses these lessons with a multifaceted plan that involves painful—but necessary—steps toward a stable and just economic future.
304 pages, Hardcover
First published January 1, 2013
21 people are currently reading
608 people want to read
About the author
Stephen D. King
14 books11 followersStephen D. King is HSBC's group chief economist and the bank's global head of economics and asset allocation research.
He writes a weekly column for the London Independent and is a member of the European Central Bank Shadow Council and the Financial Times Economists' Forum.
He is a British national living in London.
He writes a weekly column for the London Independent and is a member of the European Central Bank Shadow Council and the Financial Times Economists' Forum.
He is a British national living in London.
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Displaying 1 - 28 of 28 reviews
May 8, 2014
I could not finish this book, it just got too annoying in the last chapter. Some of the material is interesting, but overall it's Econ Lite all the way. His history is fine but very superficial, his quantitative analysis is nonexistent, and his knowledge (or lack thereof) of political culture and political economy dooms both his analysis and his prescriptions for avoiding dystopia. Countries and political systems simply don't work the way he would like them to. And history doesn't work the way he thinks it does, either. He also has the annoying tendency to use words like "witless" a lot, and I think he should address the glass house issue more :) .
July 1, 2013
When the Money Runs Out (2013) by Stephen D. King looks at the dull horror of possible lower growth rates and the implications for the West. This Stephen King is the Group Chief Economist at HSBC but he has written a book that is really scary. The book looks at how the recovery from the Global Financial Crisis (GFC) has been slow enough to suggest that developed world growth rates are going to be substantially lower than those of the period between 1945 and 2000. He argues that this will lead to a crisis of sovereign insolvency as entitlement spending will not be affordable and that the financial and monetary games that are being played are starting to hurt more than help.
King first looks at how Progress has been taken for Granted and in particular how the very high growth rates for the three decades following the Second World War may have been exception. The period 1945-1975 had the rebuilding of countries that were previously economically strong in Europe and Japan, the arrival of a plethora of new technologies in nuclear power, jet engines, containerisation, computers and a big expansion of the work force due to women entering the formal workforce.
The book then describes the pain of stagnation and looks at Japan since 1990 and Argentina and how everyone in the west believes they should be better off than previous generations and how social security spending has massively increased. In the UK in 1950 it was 4% of GDP but today it is 14% of a much larger GDP. Essentially social spending could easily increase for many years as growth allowed people to get richer and to have more taken by the government. However, with lower growth incomes are growing more slowly than social spending.
King spends the next chapters looking at financial and monetary attempts to fix stagnating economies. He looks at the depression and the responses to it and suggests that Keynesian and monetary manipulation are a bit like drugs, useful for some relief but dangerous when they become to be relied on.
King describes three schisms, income inequality, aging and distrust between creditors and debtors that will affect the ability of economies to grow. He goes further and suggests that economic dissatisfaction will lead to radical politics such as the rise of the far right in Greece. King describes a chaotic dystopia that could result if a slowdown in growth is handled poorly.
Finally King gives recommendations for how to avoid dystopia; he wants a central financial authority in the Eurozone, reductions in government spending, coming up with ways of handling generational conflict and calls for a new monetary framework to be constructed.
The book is dense and full of senior economist’s observations of historical crises and their impacts. There is also extensive exposition of major economists’ responses to them with a lot of quotation. It would be considerable improved with more graphical exposition of historical trends. King also does not explore multiple solutions to the problems he sees and attempts to unify the problems of Japan, the US and Europe that perhaps have critical differences mean that the responses should be different.
King first looks at how Progress has been taken for Granted and in particular how the very high growth rates for the three decades following the Second World War may have been exception. The period 1945-1975 had the rebuilding of countries that were previously economically strong in Europe and Japan, the arrival of a plethora of new technologies in nuclear power, jet engines, containerisation, computers and a big expansion of the work force due to women entering the formal workforce.
The book then describes the pain of stagnation and looks at Japan since 1990 and Argentina and how everyone in the west believes they should be better off than previous generations and how social security spending has massively increased. In the UK in 1950 it was 4% of GDP but today it is 14% of a much larger GDP. Essentially social spending could easily increase for many years as growth allowed people to get richer and to have more taken by the government. However, with lower growth incomes are growing more slowly than social spending.
King spends the next chapters looking at financial and monetary attempts to fix stagnating economies. He looks at the depression and the responses to it and suggests that Keynesian and monetary manipulation are a bit like drugs, useful for some relief but dangerous when they become to be relied on.
King describes three schisms, income inequality, aging and distrust between creditors and debtors that will affect the ability of economies to grow. He goes further and suggests that economic dissatisfaction will lead to radical politics such as the rise of the far right in Greece. King describes a chaotic dystopia that could result if a slowdown in growth is handled poorly.
Finally King gives recommendations for how to avoid dystopia; he wants a central financial authority in the Eurozone, reductions in government spending, coming up with ways of handling generational conflict and calls for a new monetary framework to be constructed.
The book is dense and full of senior economist’s observations of historical crises and their impacts. There is also extensive exposition of major economists’ responses to them with a lot of quotation. It would be considerable improved with more graphical exposition of historical trends. King also does not explore multiple solutions to the problems he sees and attempts to unify the problems of Japan, the US and Europe that perhaps have critical differences mean that the responses should be different.
June 2, 2013
The latest book by one of my favourite modern economists. A sobering view on the damage we have done over the years by borrowing from our children and creating an entitlement culture with the proceeds. I don't agree with some of his recommendations at the end though.
June 4, 2017
Well, another book I picked from my parent's library on a visit. In general, I find historical anecdotes and history interesting, so that was ok. Part of the interest/inflation etc business talk just made me sleepy, can't help it. Some good, but pretty obvious points- the whole globe lacks of trust, we are in an economic stagnation, it leads to political extremism. I got an overall 'considering everyone, but not really' kind of a feeling. He is and is not for austerity, inflation could or could be useful etc. It's also a bit hypocritical to speak of entitlement of everybody ( in the west), when half of the globe's wealth is owned by 1%. That is-never mentioned. Or that TTP is with one phrase' good', not even thinking of the local and environmental effects, an unified EU environmental policy is 'bad', my own phrasing( nature doesn't stop at the borders) I guess what irritates me, that he says, we shouldn't blame, but blames the politicians. The good point are that yes, economy school should teach history of economics, everybody should learn basics of economics, there is a problem of global economics and local politics, and yes, how to control the banks whose employees are not elected but make political decisions. What are the solutions- who knows, eh, as it seems nobody has not known much until to this day either.
August 4, 2019
Mr. King is an exceptional economic historian, and a pretty good economics teacher in explaining theory to people like me who aren't that educated on economic ideas. However, the problem with this book is that the solutions that he proposes aren't going to solve the crisis anytime soon, and that he does not trust his own solutions, as he says many times that he doesn't believe the solutions that he is proposing will fix the issues and that we should just accept our fate. The part on the rise of political extremism is spot on and with his history lesson in the book, makes me think that we are set on another cycle of this for the foreseeable future.
July 23, 2023
It was a hard book to read as someone with no economic background. Thus some of the lingo and context went over my head. However I believe I got some understanding of economics. However since Covid and other worldly events have happened, this book is potentially becoming outdated.
July 31, 2014
Does not deliver on the topic suggested in the title. 90% of the content covers briefly many other well know recent financial crises, often with large section of meta summaries. Weak and poorly analysed implications and causes of future economic crises in Western democracies. Would have expected better from a senior economist at HSBC.
July 9, 2019
This book made a series of fantastic observations. I don't agree with some of his recommendations but he has written a book that is really scary. In short, this is a clear analysis of the problems facing the major economies in the world.
His history is fine but his quantitative analysis is very superficial.
King quotes from all of the major economic thinkers, including Mises, Keynes, Smith, Bernanke, Friedman, etc. Sometimes to show how their words exactly describe or predict a circumstance, and sometimes to show how they got things completely wrong.
The second half of the book is better. There are some reasonable ideas and points but nothing very original.
His history is fine but his quantitative analysis is very superficial.
King quotes from all of the major economic thinkers, including Mises, Keynes, Smith, Bernanke, Friedman, etc. Sometimes to show how their words exactly describe or predict a circumstance, and sometimes to show how they got things completely wrong.
The second half of the book is better. There are some reasonable ideas and points but nothing very original.
September 22, 2021
Scary
Yes, I know that some have said he doesn't know, but my reading of the book is that he has taken the trouble to analyse what has and is happening in the financial world. Cleverly relating this to past history and as Solomon said there is nothing new under the sun. I can't fault him. But it is scary where it all taking us. Interesting too is that almost theological perspective of what is the real basic problem in the politicians, the bankers, the financial markets. That of trust. Read it and tell me if you have the correct answer.
Yes, I know that some have said he doesn't know, but my reading of the book is that he has taken the trouble to analyse what has and is happening in the financial world. Cleverly relating this to past history and as Solomon said there is nothing new under the sun. I can't fault him. But it is scary where it all taking us. Interesting too is that almost theological perspective of what is the real basic problem in the politicians, the bankers, the financial markets. That of trust. Read it and tell me if you have the correct answer.
October 12, 2021
Kniha vypráví příběh o západní iluzi věčného růstu. Znepokojivé, chytré, obtížné … skvělé.
October 28, 2023
We are now entering King's prediction. Suspect it will be worse than he predicts.
December 5, 2025
Very dated - I mistakenly thought the 2018 edition had more updated content.
Some interesting themes if you are into the topic, but struggled to finish.
Wouldn’t recommend
Some interesting themes if you are into the topic, but struggled to finish.
Wouldn’t recommend
May 30, 2016
A superb analysis of the current regimes of monetary and fiscal policy among the nations of the world, compared intelligently against the history of similar and dissimilar policies throughout the last few hundred years. King quotes from all of the major economic thinkers, including Mises, Keynes, Smith, Bernanke, Yellin, Schwartz, and Friedman, sometimes to show how their words exactly describe or predict a circumstance, and sometimes to show how they got things completely wrong.
King does have his defects. This UK-based economist conceives of health care and perhaps some other so-called "social spending" solely as a responsibility of states. He also views elder care and health benefits for the elderly as costs without economic benefit, and on this basis advocates limited health care and euthanasia for the elderly. This last view reduces the value of a human to solely what he can produce, which is a terrible attitude and precisely what fueled Marxism. It is also mistaken from an economic point of view, in two ways. First, he ignores that the continuance of healthy life even near its end is something that has economic value--in other words, it's something people are willing to pay for, and even to save for. Second, if he could see that the cost of health care, like the cost of groceries, is first and foremost the responsibility of individual consumers and not of their government, he would not be wringing his hands so much over the fiscal impact of elder care.
Keeping these defects in mind while reading, King's analysis and insights are well worth reading.
King does have his defects. This UK-based economist conceives of health care and perhaps some other so-called "social spending" solely as a responsibility of states. He also views elder care and health benefits for the elderly as costs without economic benefit, and on this basis advocates limited health care and euthanasia for the elderly. This last view reduces the value of a human to solely what he can produce, which is a terrible attitude and precisely what fueled Marxism. It is also mistaken from an economic point of view, in two ways. First, he ignores that the continuance of healthy life even near its end is something that has economic value--in other words, it's something people are willing to pay for, and even to save for. Second, if he could see that the cost of health care, like the cost of groceries, is first and foremost the responsibility of individual consumers and not of their government, he would not be wringing his hands so much over the fiscal impact of elder care.
Keeping these defects in mind while reading, King's analysis and insights are well worth reading.
November 4, 2016
checked out from Washington Co. Cooperative Library Services, 11/13 list.
from the library
should I be surprised how conservative this book is?
of course it is about Great Britain (somewhat about the USA) but it includes USA in a lot of discussions
Will all these books always start with Malthus?
Contents:
Taking progress for granted -- The pain of stagnation -- Fixing a broken economy -- Stimulus junkies -- The limits to stimulus: lessons from history -- Loss of trust, loss of growth -- Three schisms -- From economic disappointment to political instability -- Dystopia -- Avoiding dystopia.
me: note from archived article number 581: "Money - (I have more on this book.) I think it's crap. The world is changing-- that does not mean anything that does not further privilege to money class is doom for USA. The money class likes to take credit for everything and doesn't seem to remember that at least half of new businesses start as tiny and often by immigrants without a penny. The people who take progress for granted usually mean they take expansion for granted. The earth can't tolerate steady 'progress' if humans want to continue in our current lifestyle. Real progress had better start meaning something else. I figure the planet will handle this for us by raising sea level to high enough to put the ten mile perimeter of all the continents under water."
from the library
should I be surprised how conservative this book is?
of course it is about Great Britain (somewhat about the USA) but it includes USA in a lot of discussions
Will all these books always start with Malthus?
Contents:
Taking progress for granted -- The pain of stagnation -- Fixing a broken economy -- Stimulus junkies -- The limits to stimulus: lessons from history -- Loss of trust, loss of growth -- Three schisms -- From economic disappointment to political instability -- Dystopia -- Avoiding dystopia.
me: note from archived article number 581: "Money - (I have more on this book.) I think it's crap. The world is changing-- that does not mean anything that does not further privilege to money class is doom for USA. The money class likes to take credit for everything and doesn't seem to remember that at least half of new businesses start as tiny and often by immigrants without a penny. The people who take progress for granted usually mean they take expansion for granted. The earth can't tolerate steady 'progress' if humans want to continue in our current lifestyle. Real progress had better start meaning something else. I figure the planet will handle this for us by raising sea level to high enough to put the ten mile perimeter of all the continents under water."
This entire review has been hidden because of spoilers.
April 4, 2016
There is a lot to both admire and dislike in this book.
King is firmly embedded in the pessimistic camp when it comes to the world economy. He provides a lot of reasons to worry about our future. He provides breezy accounts of past horrors (the Black Death, its economic causes and consequences) that hint at the Walking Dead future that may be just around the corner, or the corner after that.
He has a chip on his shoulder about central bankers. I think that their past hubris is over-stated. I doubt if even Alan Greenspan, caricatured for self-regard in his own omniscience and the power of wisely guided monetary policy to right all aspects of the world economy, is fairly treated.
Still he has a lot of sensible things to say. He brings out the important redistributive aspects of monetary policy (not in this context about income equality, but between creditors and debtors and between alternative allocations/misallocations of capital/savings) and he is convincing in his argument that nominal income targeting rather that price index targeting may serve us better. His sensible view that we will like it or not have to suck it up and live within our means, that there is no magic bullet of economic policy, isn't likely to cheer anyone up, but he is, in my view right.
King is firmly embedded in the pessimistic camp when it comes to the world economy. He provides a lot of reasons to worry about our future. He provides breezy accounts of past horrors (the Black Death, its economic causes and consequences) that hint at the Walking Dead future that may be just around the corner, or the corner after that.
He has a chip on his shoulder about central bankers. I think that their past hubris is over-stated. I doubt if even Alan Greenspan, caricatured for self-regard in his own omniscience and the power of wisely guided monetary policy to right all aspects of the world economy, is fairly treated.
Still he has a lot of sensible things to say. He brings out the important redistributive aspects of monetary policy (not in this context about income equality, but between creditors and debtors and between alternative allocations/misallocations of capital/savings) and he is convincing in his argument that nominal income targeting rather that price index targeting may serve us better. His sensible view that we will like it or not have to suck it up and live within our means, that there is no magic bullet of economic policy, isn't likely to cheer anyone up, but he is, in my view right.
July 7, 2013
An interesting and provocative book that covers a lot of historical and macroeconomic ground in making an argument that the West is going through not a cyclical slowdown that can be addressed by macroeconomic measures but a long-term structural slowdown like that experienced by Argentina starting a century ago or Japan twenty years ago. But Stephen King does not always convincingly link his historical analysis to his present diagnosis (e.g., he believes that one way stagnation becomes self-fulfilling is it leads to anti-immigrant policies, then he says that is exactly what is happening in the United States today, citing Arizona but missing the Federal debate on immigration which undercuts his thesis), some of his economic analysis is contradictory (he can't decide if he likes QE because it prevented a second Great Depression or does not like it because it distracts from addressing what he sees as structural problems), and ultimately it is longer on diagnosis than it is on prescription (which for the United States mainly consisted for more medium-term entitlement reform for fiscal policy, nominal GDP targeting for monetary policy, greater worldwide coordination of financial regulation, and economists being required to study history).
January 30, 2015
The first 200pages of this book are global historical examples of monetary and fiscal mistakes. The next 60 pages explain why running on continually growing deficits is dangerous, explains why creditor nations have the upper hand over debtor nations,why trust in the world financial community is eroding and why trust is essential to any functioning monetary transaction, presents guidelines for an EU fiscal union, how central bankers in the USA should focus on nominal rates rather than interest rates (which was over my head), why sound financial principals should be taught in school, and economics should turn to historical implications rather than advanced mathematical models. Not suprisingly the Author has seemingly sound ideas that will never come to fruition because he is not emperor of the world and the current state of international relations is more based on self interest rather than global preservation. He also addressed the conundrum of the American economic policy of spending now and basing our future budget off of future sustained growth. I believe this is an incredible moral shortfall and I wish he would have talked about how to create a sustainable economy not based on ever rising growth rates.
September 9, 2014
A disappointing read. It sketches out some economic history, a bit about the crisis and some basics of economic theory. But if you are sufficiently interested in this subject you will probably already know this, and to a knowledgable reader the analysis is lightweight.
The final chapter promised solutions but fails to deliver. There are some reasonable ideas and points but nothing very original. The final paras where he uses "we" and "our" made me furiously mutter "You speak for yourself! There are plenty who did not!"
So if you want to understand more about the crisis, why it was not foreseen and prevented, and what might be done next - I suggest you read something else as this is not it.
The final chapter promised solutions but fails to deliver. There are some reasonable ideas and points but nothing very original. The final paras where he uses "we" and "our" made me furiously mutter "You speak for yourself! There are plenty who did not!"
So if you want to understand more about the crisis, why it was not foreseen and prevented, and what might be done next - I suggest you read something else as this is not it.
August 2, 2015
This book made a series of observations that I agree with while providing even more disagreeable assertions. Among the positive be side is this quotation of Kenneth Arrow - “Trust is an important lubricant of a social system. It is extremely efficient: it saves a lot of trouble to have a fair degree of reliance on other people's word … Trust and similar values, loyalty or truth-telling, are examples of what the economist would call ‘externalities’. They are goods, they are commodities, they have real, practical, economic value; they increase the efficiency of the system, enable you to produce more goods or more of whatever values you hold in high esteem. But they are not commodities for which trade on the open market is technically possible or even meaningful.”
March 13, 2017
What I liked the most about this book is the sense of hope that it transmits: the challenge of economic stagnation is huge, and life won't become any easier in the future, but we can still actually do something. All we need to do is roll up our sleeves and get to work. I hope a lot of more people read this book.
November 2, 2013
Good read. Particularly good if you don't agree with the decline of western influence. King's use of historical evidence prompts thorough review of where we are both politically and fiscally. Worth reading.
March 7, 2015
Not my cup of tea.
September 28, 2013
Great read about consequences of living beyond your means...whether on a personal, business, or government level, in addition to national and global consequences.
May 14, 2014
Well we are doomed!
June 12, 2014
Interesting premise but too many figures thrown about and too little deep analysis. Seems a bit padded to length, making the same points again and again.
January 17, 2015
Interesting read but heavy going for the lay reader.quite repetitive and sobering. Sounds on the money
March 1, 2016
Clear analysis of the problems facing the major economies in the world in a well-written book.
February 12, 2021
This is a book everyone should read.
Displaying 1 - 28 of 28 reviews