The Indicator from Planet Money

Are we in an economic 'doom loop'?

February 9, 2026

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  • Economist Eswar Prasad argues that the global economy is caught in a "doom loop" where geopolitical and economic forces negatively reinforce each other, leading to disorder. 
  • The doom loop is exemplified by globalization creating economic discontent that fuels populist "politics of resentment," the fragmentation of international institutions as major powers withdraw or create alternatives, and technology exacerbating wealth inequality. 
  • Escaping the doom loop requires a combination of citizens adopting a global perspective, leaders prioritizing long-term shared prosperity over short-term interests, and the development of better institutions. 

Segments

Introduction to Doom Loop
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(00:00:17)
  • Key Takeaway: Eswar Prasad’s research convinced him the global economic future is bleaker than initially hoped, leading to his book, “The Doom Loop.”
  • Summary: The episode introduces Eswar Prasad, an economist who initially sought an optimistic economic narrative but concluded the global economy faces a bleak future. His book, “The Doom Loop: Why the World Economic Order is Spiraling Into Disorder,” details how forces meant to stabilize the economy are achieving the opposite. The discussion will focus on three examples of this dynamic: globalization, institutions, and technology.
Globalization and Resentment Politics
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(00:03:39)
  • Key Takeaway: Uneven distribution of globalization’s benefits created a class of disaffected people, enabling populist leaders to harness the “politics of resentment” against elites, immigrants, or foreign nations.
  • Summary: Globalization, while reducing poverty globally, created internal economic discontent because benefits were not evenly shared, allowing elites to capture the political system. This discontent opens the door for populist leaders like Jair Bolsonaro, Victor Orbán, and Donald Trump, who blame external or internal ‘others’ for people’s problems. This politics of resentment can lead leaders to demonize minorities or initiate international conflicts.
Institutional Fragmentation
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(00:05:14)
  • Key Takeaway: The US withdrawing from international bodies like the UN, coupled with emerging markets creating parallel institutions (like the AIIB), leads to fragmentation and instability instead of cooperation.
  • Summary: International organizations like the UN, World Bank, and IMF, once pillars of stability, are losing cohesion as the US pulls back due to perceived misalignment with its narrow interests. Emerging economies, feeling the IMF and World Bank favor richer nations, are establishing their own parallel structures, such as the Asian Infrastructure Investment Bank. This shift from common rules to fragmented clubs increases the likelihood of strife both within and between countries.
Technology’s Dark Side
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(00:07:10)
  • Key Takeaway: Technologies like stable coins and AI, despite offering progress, risk intensifying the doom loop by undermining smaller national currencies and concentrating wealth among a few.
  • Summary: While technology offers economic progress, specific innovations carry risks; stable coins backed by the US dollar threaten to cause smaller national currencies to vanish due to direct competition. Furthermore, the rise of AI is concentrating wealth among a small group, raising concerns about how broadly its benefits will be shared. These technological shifts are predicted to create underlying tensions that intensify the existing doom loop.
Pathways Out of the Loop
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(00:08:31)
  • Key Takeaway: A way out of the doom loop requires citizens to see themselves as global community members, leaders to look beyond short-term prejudice, and a commitment to building better institutions.
  • Summary: Prasad offers a hopeful, though challenging, path forward by advocating for a shift in citizen perspective toward shared global prosperity. This requires leaders at all levels to guide people past short-term interests and prejudices. Ultimately, reversing the disorder necessitates working hard to change the current reality and establishing improved institutional frameworks.