While we were told that the world had entered the epoch of the ‘Great Moderation’ – a kind of new Eldorado in which permanently high growth was coupled with low inflation and unemployment (Bernanke, 2004) – an unsustainable debt overhang was accumulating at the global level. That was the result of several causes: global imbalances, excessively lenient monetary policy by the Federal Reserve and the downside of deregulation/liberalization of finance. I will first look at the first two of these causes in order, leaving the third for the rest of the chapter.