Adair Turner became chairman of Britain’s 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 didn’t 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.
Part I Swollen Finance
Chapter 1 The Utopia Of Finance For All
Chapter 2 Inefficient Financial Markets
Part II Dangerous Debt
Chapter 3 Debt, Banks, And The Money They Create
Chapter 4 Too Much Of The Wrong Sort Of Debt
Chapter 5 Caught In The Debt Overhang Trap
Chapter 6 Liberalization, Innovation, And The Credit Cycle On Steroids
Chapter 7 Speculation, Inequality, And Unnecessary Credit
Part III Debt, Development, And Capital Flows
Chapter 8 Debt And Development: The Merits And Dangers Of Financial Repression
Chapter 9 Too Much Of The Wrong Sort Of Capital Flow: Global And Eurozone Delusions
Part IV Fixing The System
Chapter 10 Irrelevant Bankers In An Unstable System
Chapter 11 Fixing Fundamentals
Chapter 12 Abolishing Banks, Taxing Debt Pollution, And Encouraging Equity
Chapter 13 Managing The Quantity And Mix Of Debt
Chapter Part V Escaping The Debt Overhang
Chapter 14 Monetary Finance—Breaking The Taboo
Chapter 15 Between Debt And The Devil—A Choice Of Dangers
