Former Morgan Stanley Chief Asia Economist, Andy Xie says that the world's elite who are present in G7, G20, Davos and other wasteful meetings are at fault in putting the blame for the turmoil on people's psychology. It only leads to a prolonged period of global stagnation and instability.

The global economy is on the edge for another recession. However, important people make it answerable to the psychological problem of the people. Prior to G7 meetings, the G20 working group meeting in Shanghai failed to have any constructive proposals for revitalizing the global economy. It only led to complains that the recent market turmoil did not reveal the 'underlying fundamentals of the global economy.' The world witnessed the 18moa of the oil price by 70 per cent since June 2014. The Brazilian real has halved while the Russian rouble is down by 60 per cent.

Global meetings only put to waste the taxpayers' money and highlights incompetent leaders. The global economy took another direction where in fact, the past two decades brought the entry and participation of 800 million hard-working Chinese and adding the information revolution. And yet, people are still complaining.

One major complaint identified is that the system is manipulated. The rising income concentration is not due to free market competition but the effect of a rigged system which favours the politically powerful. New billionaires emerged over the past two decades mostly came from finance and property. Only a number created something that makes people more productive, the way Steve Jobs and Bill Gates did.

One significant factor in the rigged system is the monetary policy being used to propel financial markets in order to encourage growth for people's benefit. This boils down to the trickle-down wealth effect which made some people in the financial food chain get rich while the spillover gives people a few crumbs. And the crumbs meant that the wealth effect has pushed property prices up in Manhattan, London and Hong Kong and also the price of modern art. In effect, the wealth stayed among the small circle of the wealthy. Policymakers considered this as 'successes' when they showed up at the Davos meeting.

Wasting resources is another factor of equal importance in making the global economy weak and prone to crisis. The financial crisis in 2008 had the US government and Federal Reserve spent trillions of dollars in bailing out the people who in the first place, created the crisis. These people became even richer instead of facing bankruptcy and jail. As expected, they have the resources to let the system work for them.

Beijing had launched a considerable investment push after 2008 which made the global ruling elite praised China for saving the global economy. The country has increased credit by over US$20 trillion to fund the construction of factories and homes. Unfortunately, investment does not assure of a final demand. We can see that the process of building up a factory can create demand. However, its completion brought in the need to sell its goods to another. China was building more factories to keep it occupied which only translates to another get-rich-quick scheme. This is just a beginning of yet another disturbing outcome.

China's overinvestment forced the commodity prices up and in turn, led to another Ponzi scheme. With the commodity prices going up, businesses in emerging economies were able to loan the amount of US$ 9 trillion. Major central banks cut interest rate to zero as there did not seem to have a growing demand from people who were suffering from income attrition. The trillions of dollars then went to the energy sector and more into other commodity industries. China's investment Ponzi scheme has a mountain of debt floating on a commodity and its impact on the global financial system and could be a bigger financial crisis back in 2008.