The slow economic growth environment could turn into recession if Washington can't break the political gridlock and step up with meaningful fiscal reform, Allianz Chief Economic Adviser Mohamed El-Erian told CNBC on Wednesday.
"We have relied excessively on central banks," the former co-CEO of Pimco said on "Squawk Box," because the response to the 2008 financial crisis was "too cyclical" minded.
In other words, El-Erian thinks the Fed and its counterparts around the globe have kept the spigots of easy money flowing for too long, hoping growth will come around.
"We as a society fell in love with finance as the engine of growth," he said. "Up to 2008, we depended on private finance. Since 2008, we've depended on central banks. We have forgotten what it takes to grow an economy in an inclusive manner."
El-Erian believes quantitative easing and ultra-low interest rates have done all they can do, and the White House and Congress need to join the fight against stagnation by crafting structural reforms.
But so far, he said: "Politicians are not stepping up to the plate."
"If we're not careful we're going to take a turn where slow growth turns into recession," said El-Erian, who's been warning of the perils of the "new normal" for about seven years now, a phrase he coined while at Pimco.