223 The Journal of Interdisciplinary Economics, 2011, Vol. 23, pp. 223–238 © 2011 A B Academic Publishers Printed in Great Britain Do We Eat Too Much? The Current Economic Crisis as a Result of Overconsumption Piotr Marek Jaworski* Edinburgh Napier University Jörg Weber** The University of Nottingham ABSTRACT Over the past 15 years, a fairly synchronised and steady increase of the current account deficits of the US and the UK has been witnessed, while at the same time real house prices and real wages in these two economies increased sharply. We analyse the offspring of the economic crisis of 2008 within the framework of Minsky’s theory of financial crisis, and identify the reasons behind this development as the global imbalances. Our empirical results show that overconsumption in the US and UK caused unsustainable growth, which manifested first in real wage inflation. Within this development, neither the financial sector nor failed regulation is to blame, as financial intermediaries merely fulfilled their requirements as the vehicle between borrowers and lenders. Instead, we argue, our ‘need’ for overconsumption is to blame, and policy makers are required to address this issue as soon as possible in order to avoid another, probably more severe crisis in the long-run. 1. THEORETICAL BACKGROUND In 2000, Robert Gilpin focused in the fifth chapter of his book “The Challenge of Global Capitalism” in the 21st century (Gilpin, 2000) on financial instability. The part devoted to the crisis suggests that poor economic management, especially in the area of trade and payments deficits, could lead straight into financial crises. In this scenario, *p.jaworski@napier.ac.uk **weber@jwe.cc