The best solution to the global financial crisis is to revert to an economy of goods and services that is based less on finance, former US president Bill Clinton said Saturday.

"I believe the best outcome for us would be a 21st century economy in which more money is made in the production of goods and services and less money is made in finance," Clinton said at a meeting with Inter-American Development Bank (IDB) president Luis Alberto Moreno.

In such an economy, "people make money in finance the old fashion way, by making investments in products that people want to buy, but not by building sand castles in the sky," he added.

Clinton, the guest of honor at the IDB's 50th anniversary celebrations in the northwestern Colombian city of Medellin, backed President Barack Obama's plans to revive the battered US economy and chart new rules for financial oversight.

"I believe that President Obama's approach has been basically correct. I support his economic stimulus package, even though he has had to borrow money. I hate that," Clinton said.

Clinton, who served as president for eight years starting in 1993, said he began to worry about the US economy "several years ago, when it became obvious, with the Internet bubble burst, that there was no real economic growth in America except in housing and consumer spending, and finance."

"Nobody knows when the hangover will get over. I think we need a combination of sound monitoring policies and a healthy finance system, and short-term stimulus where is appropriate," he added.

The former president also expressed his concern about the economic impact of global poverty and inequality.

"One of the things that makes the world more unstable is the absence of a strategy to fight inequality," he said.

The IDB meeting, where US Treasury Secretary Timothy Geithner was set to speak Sunday, comes as the organization seeks to increase its lending capacity to Latin American countries reeling from the effects of the global financial crisis, which has dried up credit.

AFP