With the fall of the Soviet empire, liberalism seemed to triumph - but only until the great financial crisis of 2007/08.

The opponents of the order of freedom blamed the crisis on "neoliberalism" and turned it into a wrecking ball for liberalism.

The cause of the crisis lies in the financialization of the economy, which was largely driven by the policy of the central banks.

Inflation fell in the 1980s as central banks corrected their wrong policies of the 1970s.

However, since the early 1990s, globalization and technological advances have depressed inflation.

Bigger and bigger financial bubbles


The central banks braced themselves against the fall in inflation below their target value with ever lower interest rates.

As a result, the prices of real assets such as stocks and real estate and debt rose.

Ever larger financial bubbles emerged, the correction of which the central banks prevented by lowering interest rates because they feared the consequences of the mass bankruptcy of overindebted private and public debtors.

The great financial crisis was the result of the last bubble for the time being, which was also the largest in the series, as it originated in the real estate market, where debt is particularly high.


Instead of recognizing the financialization promoted by the central banks as the cause of the crisis, a large section of society, which was angry about the "bank bailout", followed the whisperings of opponents of the order of freedom, who saw the crisis as an opportunity to advance their political agenda through the media .

Political moralism and identity politics from the left-green side led to the corresponding response from the right-wing national side, which celebrated its greatest triumph to date with Trump's entry into the White House.

Avoiding even greater disaster is only possible when people understand that their individual freedom needs a common order.

If they do not, the calamity will reach a dimension that will force repentance.


Thomas Mayer is founding director of the Flossbach von Storch Research Institute and professor at the University of Witten / Herdecke

This text is from WELT AM SONNTAG.

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Source: Welt am Sonntag