Between Debt and the Devil: Money, Credit, and Fixing Global Finance by Adair TurnerAdair Turner became chairman of Britains Financial Services Authority just as the global financial crisis struck in 2008, and he played a leading role in redesigning global financial regulation. In this eye-opening book, he sets the record straight about what really caused the crisis. It didnt happen because banks are too big to fail--our addiction to private debt is to blame.
Between Debt and the Devil challenges the belief that we need credit growth to fuel economic growth, and that rising debt is okay as long as inflation remains low. In fact, most credit is not needed for economic growth--but it drives real estate booms and busts and leads to financial crisis and depression. Turner explains why public policy needs to manage the growth and allocation of credit creation, and why debt needs to be taxed as a form of economic pollution. Banks need far more capital, real estate lending must be restricted, and we need to tackle inequality and mitigate the relentless rise of real estate prices. Turner also debunks the big myth about fiat money--the erroneous notion that printing money will lead to harmful inflation. To escape the mess created by past policy errors, we sometimes need to monetize government debt and finance fiscal deficits with central-bank money.
Between Debt and the Devil shows why we need to reject the assumptions that private credit is essential to growth and fiat money is inevitably dangerous. Each has its advantages, and each creates risks that public policy must consciously balance.
[Lecture] Lord Adair Turner - Between Debt and the Devil: Money, Credit and Fixing Global Finance
Between Debt and the Devil by Adair Turner review – should the government start printing money?
Business Economics. Since , we have found it incredibly difficult to achieve adequate nominal demand growth. Total global debt to global GDP is now higher than it ever was before. When interest rates are already low, further reductions of interest rates have very little influence on investment and consumption. Ultra-loose monetary policy does produce increases in asset prices. There has been inadequate focus in economics on the different functions that credit creation plays within the economy.
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Between Debt and the Devil: Money, Credit, and Fixing Global Finance Hardcover – October 20, Adair Turner became chairman of Britain's Financial Services Authority just as the global financial crisis struck in , and he played a leading role in redesigning global.
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Sometimes the best ideas in economics hide in plain sight. And to his great credit, Adair Turner, the former chairman of the UK Financial Services Authority who now heads the board of the New York-based Institute for New Economic Thinking, has rediscovered one that is usually consigned to a footnote in macroeconomics textbooks. Most likely, you'll initially be inclined to dismiss Turner's case as fiscal sleight-of-hand, a technique that promises too much gain for too little pain to be realistic. But keep reading, and just as likely your skepticism will morph into dismay that an idea this good could have been ignored for so long. Eurozone GDP has not yet returned to pre-crisis levels; unemployment exceeded 10 percent at the end of and inflation is far below the European Central Bank's close-to-2 percent target. Japan continues to struggle with low growth and relentlessly rising public debt.
A fter the crisis of , every concerned citizen wanted to understand what had been going on in the City to take us all to the brink of bankruptcy. Adair Turner refreshes the memory on all of this arcana, but the invigorating thrust of his brilliant new book is that much of it is beside the point. Head-spinning new practices may have intensified the frenzy, but their chief role was always to disguise an older enemy: debt. For Turner, the credit crunch was in essence a debt crisis of the sort that has been a periodic occurrence ever since banking and modern money came into being. Once medieval goldsmiths realised that their clients were not all going to demand their bullion back at the same instant, they began writing out promissory notes for more treasure than they had in their vaults. Every economics undergraduate learns that modern banks still magic up money this way — lending out more than is paid in.
I found myself skimming over large sections and nodding in agreement. He argues that nothing regulators have done thus far has addressed the fundamental underlying cause of financial instability Turner's book is tightly argued and is packed with insights about the financial markets as well as the real economy. He adds to the literature that explains why more and more finance is not always good. The proposed cure requires going beyond the present financial regulatory reform.