The financial system limit brings with it a political system limit.
Politicians need to be aware that there are no easy answers,
no policy tools that can solve the dilemma of ‘expand now and add
to stagnation in a decade, versus do not stimulate and risk immediate stagnation,’ which is discussed in the book.

What led politicians to make our financial worse?
Economics originated as a social and political discipline but has
somehow lost its way lost in the detail of microeconomics.
The old formula of ‘stimulate your way out of recession’ worked when debt levels were much lower, nowhere near
the feasible limits, and therefore credit could expand
without anyone worrying about the consequences. As noted, for a period that
ended nearly forty years ago, that expansion caused negative real interest rates.
Now, after seventy-five years of the post-war consensus, in which
every recession has been neutered by economic stimulus, the economic cycle driven by central
banks keeps bumping up against the financial system limit.

Central banks are now the victim of their past policies.

The Fed, and other central banks, need to keep on stimulating so that more
credit can pay for the cost of borrowing resulting
from previous debt creation. The alternative is to crash the economy, which
nobody wants. The financial system limit and political system limit are interlinked.