Between Debt and the Devil - Adair Turner

Money, Credit and Fixing Global Finance

Don't be put off - this really matters.

Adair Turner was appointed Chairman of the Financial Services Authority following the 2008 crash. He authored a report on the reasons for it and spent the next four years engaging with finance leaders seeking ways to avoid the same problems happening again. He knows his stuff.

His recent book, Between Debt and the Devil, is chilling. I read it in between working with refugees on Lesvos and it is all connected.

He sees a healthy economy as a prerequisite to successful life. It is the lack of this, and the tyranny of oppressive regimes that is sending millions seeking refuge elsewhere.

Inequality is highlighted as a major reason for the problems we face. In the last thirty years the rich have got so much richer and the poor so much poorer; many middle earning jobs have disappeared. Rich people are less likely to buy goods and services, which fuel an economy, and more likely to invest in property which benefits only them and the person who sold it to them. A better distribution of income enables more people to consume goods and services and so make the economy healthy and likely to grow.

Turner's main concern though is the level of debt, both personal and governmental, in the world. It is at an all time high. The UK accumulated massive debt during WWII for reasons we can all understand. This borrowing was not effectively repaid until 1970 and it was only possible to repay it because the UK economy grew strongly with the benefit if technical innovation. The debt now is even higher mainly because of the recession caused by the credit crunch which made people reluctant to spend which reduced government's revenues and so made them borrow more.

He has some revolutionary suggestions for reducing the debt burden and for avoiding it going forward. I will leave it to the Guardian to explain more and to give more detail, but in essence he is suggesting that governments should simply print more money - a one off exercise in effect to wipe the slate clean, or at least to reduce the debt to manageable levels. He is clear that it must not be ongoing as it was in pre war German and which lead to hyper inflation.

I shall follow the debate with huge interest. It really does matter.