Cost push inflation ... Cost push ... Cost pressure

Financial cost -- essentially, debt and interest cost -- is the source of the cost pressure which leads to inflation and slow growth. And the more we use tight money to fight inflation, the worse things get. Tight money is not the proper response to cost pressure.

Economic policy is the engine that drives the growth of finance and financial cost. Policy encourages it. We think our pro-finance policies are good. We think those policies help the economy and we are unwilling to change them. Our unwillingness to reverse those policies is the reason we have been unable, since the 1970s, to eliminate the upward pressure on prices and wages and the downward pressure on growth.

There can be no way out of this problem until we change our thinking about the benefits of finance.

Look: The effects of finance are nonlinear. When we have little debt, as in the 1950s and 60s, the benefits of finance outweigh the costs. But when we have too much debt, as in the 1970s and after, the costs of finance outweigh the benefits.

It's pretty simple, really. When you have too much debt, it does more harm than good.