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The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse

January 28, 2016


Mohamed A. El-Erian's new book provides the crucial roadmap for preventing the next global economic catastrophe.

The Only Game in Town achieves the nearly impossible:  it takes complex financial issues and events and makes them both enlightening and entertaining. It’s a terrific book.”

—Jack Welch

Our current economic path, underpinned by central bank policy experimentation, is coming to an end. The signposts are all around us: rising inequality, sluggish growth, political tensions, and volatile financial markets. At the end of the path lies a “T-junction:” one path leads the global economy to renewed growth, prosperity and financial stability; the other to recession and market disorder. Mohamed A. El-Erian — chief economic advisor at Allianz, the corporate parent of PIMCO where he served as CEO and co-CIO, and chair of President Obama’s Global Development Council — provides the crucial roadmap for preventing the next global economic catastrophe in The Only Game In Town: Central Banks, Instability, and Avoiding the Next Collapse (Random House Hardcover; On Sale January 26, 2016).

El-Erian begins by providing historical context, explaining how and why our central banks became the essential, if not only policy makers in the global economy; and why this role is increasingly unsustainable. While central banks saved the financial system from collapse in 2008, they lacked the tools to enable a return to true economic growth, shared prosperity, and durable financial stability. Unassisted by other policymakers with better tools, their actions were more of a bridge than a destination; and, lacking the support of other policymakers, they have proven more helpful to financial markets and Wall Street than to Main Street.

What the world desperately needs is a hand-off, from a prolonged period of central bank policy experimentation to a more comprehensive strategy that better targets what ails economies and the financial sector. Otherwise, the current path, which increasingly is being shaken both from above and from below, will succumb to the combined impact of ten pressures:

  • Inadequate economic growth
  • Pockets of excessive long term and youth unemployment
  • A steepening inequality trifecta – of income, wealth and opportunity
  • Continued erosion of trust in key institutions
  • National political dysfunction and the rise of anti-establishment movements
  • Lack of global policy coordination and escalating geo-political tensions
  • The migration and morphing of financial risks from banks to non-banks
  • Pockets of market illiquidity and the more general delusion of liquidity
  • An unsustainable gap between financial risk-taking (high) and economic risk taking (low)
  • An operating system that risks derailing even the better-managed countries and companies

El-Erian shows how these ten factors can be addressed through a more comprehensive policy approach adopted by our politicians, together with better cross-border policy coordination. Noting, however, the uncomfortably low probability of such a policy pivot being implemented any time soon, he looks at the distribution of potential outcomes and details the key adaptations that that would allow us to better understand and navigate this watershed moment for the global economy.

In his last #1 New York Times/Wall Street Journal bestseller, When Markets Collide, El-Erian provided a much needed insight into the subsequent financial collapse of 2008. Now, The Only Game In Town provides a framework for understanding this next turning point and gives us the tools we need to prepare for it.


Mohamed A. El-Erian is chief economic advisor at Allianz the corporate parent of PIMCO where he served as CEO and co-CIO, and chair of President Obama’s Global Development Council. He is a columnist for Bloomberg View and a Financial Times’ contributing editor. El-Erian was named to Foreign Policy’s list of Top 100 Global Thinkers for four consecutive years (2009- 20012), and named by that journal as one of the 500 most powerful people on the planet in 2013. He appears regularly on CNN, CNBC, Bloomberg and elsewhere, and his writings have appeared in Fortune, the New York Times, the Wall Street Journal, the Washington Post, Business Insider, Newsweek, The Atlantic, Latin Finance, and many other outlets. El-Erian’s last book, When Markets Collide, was a #1 New York Times and Wall Street Journal bestseller, won the Financial Times/Goldman Sachs Award for best business book of the year, was named as a best book of the year by The Economist, and called a best business book of all time by the Independent.

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