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12 November 2014
Why capitalism is not doing its job

Published in The Australian Financial Review - Christopher Joye

The biggest threat facing contemporary capitalism is democracies rejecting its key feature: the “creative destruction” imposed by freely functioning markets, which is the main driver of productivity.

The prices we see today for equities, bonds and housing are not remotely near their true market “clearing” levels.

They are fake prices – to borrow a phrase used by Australia’s Matthew McLennan who manages $80 billion for First Eagle Investments – that have been artificially lifted by governments spending trillions of dollars buying assets in a misguided bid to maintain their values.

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