I won't be the last
I won't be the first
Find a way to where the sky meets the earth
It's all right and all wrong
For me it begins at the end of the road
Eddie Vedder, End of the Road

The swift, deep and aggressive policy action adopted by the policy makers of advanced economies during the global financial crisis avoided the dire outcome of banking system failure. But, as any first-year student of economics will tell you, there ain't no such thing as a free lunch (TANSTAAFL). To this end, recent months has seen growing recognition amongst capital market participants that the solutions that were brought to address the crisis have the attributes of a magic elixir that has morphed into poison.

As PIMCO's Tony Crescenzi notes, many of the world's advanced economies have reached the so-called Keynesian Endpoint. To state things baldly, these nations have reached the point where there are no more balance sheets left to support either economic activity or the financial system. This point is not literally true, because in places such as France and Britain nationally owned real estate and, in places, operating assets, are being sold to raise scarce capital. But, as Crescenzi argues, the point is true in practice because investors have no tolerance left to cater for fiscal profligacy or the monetisation of deficits by the world’s central banks.

Thus, as Crescenzi notes, "[N]ations are left with old playbooks and fewer choices by which to resolve their respective problems. This means that time, devaluations and debt restructurings might be the only way out for many nations. It also means their citizenry will require politicians that can think outside of the box and act with greater unity and resolve than perhaps they are used to."

As the saying amongst investors goes, the four most dangerous words in investing are "this time is different". That advanced nations have reached the Keynesian Endpoint is startling, but not surprising. Mountains of debt, a belief that more debt would solve a credit crisis and policy actions that involved fiscal splurging and the wild printing of money initially carried with it the belief that this time was different. And with this came the belief that the end point could be averted and that the music did not have to stop. The sobering reality is that this time is never different, and the Keynesian Endpoint is at hand.