Between Debt and the Devil: Money, Credit and Fixing Global Finance
Published on Nov 20, 2015
When the financial crisis struck in 2008, households and businesses in advanced economies were so deeply leveraged that private-sector debt exceeded GDP in some countries. Was the growth of credit and private debt in decades leading up to the collapse a contributor to economic growth or a precursor to the meltdown?
Adair Turner was named chairman of the UK Financial Services Authority in 2008, just as the crisis was unfolding. His position at the FSA, and his role as chairman of the International Financial Stability Board’s major policy committee, gave him deep insight into the causes and consequences of the crisis.
At this Milken Institute Forum, the author of “Between Debt and the Devil: Money, Credit, and Fixing Global Finance” will challenge the assumption that we need credit growth to achieve economic growth. In fact, Turner contends, excessive private-sector debt is one of the principal reasons the crisis was so devastating and the recovery so long. Turner offers a prescription to keep it from happening again: Manage the growth and allocation of credit through public policy, restrict real estate lending and tax debt as a form of “economic pollution.” He also offers a bold challenge to conventional central banking wisdom with a call for debt monetization to be part of the policy tool kit to assure stable growth, and to deal with huge debt overhangs around the world.
