This book examines the main causes of financial instability and highlights that,

with the exception of wars and pandemics, the financial system is the source of the

crisis, not just a means of spreading it, as most mainstream experts believe. Based on

the following findings, the innovative sections of this book provide academics and

policymakers with important and practical knowledge: because negative shifts in the

financial system precede recessions, financial indicators can predict the onset of a

crisis much earlier than real variables; the proposed recession forecasting model can

predict the emergence of the crisis a month in advance. When the economy’s sensitivity

to the financial system is reduced, there will be only modest negative economic

growth and no true recessions.