The Fiscal Squeeze and the Post-Crisis Fiscal Sneeze

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When you have a huge financial crisis, the private sector always cuts back spending. This is because demand is weak and there's no reason to invest. The US and UK were not going to run huge surpluses so they had to reduce government deficits. By reducing them, it was inevitable that the economy would be weak for a long time. There was an attempt to offset this by ultra-loose monetary policy. I think it created problems of its own. We're still suffering the consequences.

In the first of this four-part series, the renowned FT columnist and economist Martin Wolf tells the FT’s executive opinion editor Jonathan Derbyshire why he fears the marriage of liberal economics and democracy may be facing its toughest test in decades. Drawing on arguments in his latest book, The Crisis of Democratic Capitalism, Martin explains how his own life story and career have shaped his views.

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Martin Wolf: in defence of democratic capitalism

For Martin’s FT columns click here

For the FT review of Martin’s book click here

This episode is presented by Jonathan Derbyshire. The producer is Laurence Knight. The executive producer is Manuela Saragosa and the sound engineer is Breen Turner. The FT's global head of audio is Cheryl Brumley.

Clips: BBC, CNN, Fox News

Read a transcript of this episode on FT.com

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