Avoiding the Carbon Crash: reform the financial system now

The global financial system displays the same bounded resilience that many complex systems in nature display. Within certain limits the system maintains its integrity but when those limits are broken positive feedback loops can rapidly move the system to a very different state. We refer to such events in the financial markets as “crashes”. Given that the financial system is central to the allocation of capital and liquidity, such crashes rapidly impact the “real” economy. This was the case in the 1930′s, and a repeat was only averted in 2009 through unprecedented measures taken by central banks and governments.