A decade after the acute phase of the Great Financial Crisis and economists are still arguing amongst themselves whether there is any need for a fundamental rethink of macroeconomics and the development of the “Big New Idea”.

While the economists debate the issue, I have gone ahead and developed the “Big New Idea”.

Consider for a moment the Information Matrix.

Regular readers know it explains the design of the global financial system, it explains why financial crises occur, it explains where financial crises originate in the global financial system and it explains how to end financial crises.

If that was all the Information Matrix did, it would be worthy of teaching in Economics 101.

In addition, the Information Matrix links humans as economic agents to humans as behavioral beings with a fondness for a good story.  It is only in the presence of perfect information humans can act in the rational way Economists who build models assume they act.  Perfect information gives them the ability to Trust, but Verify any story they are told.  In the presence of opacity, humans act as behavioral Economists predict.

Information Matrix