Lost Decades: The Making of America's Debt Crisis and the Long Recovery
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- $27.99
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- $27.99
Publisher Description
A clear, authoritative guide to the crisis of 2008, its continuing repercussions, and the needed reforms ahead.
The U.S. economy lost the first decade of the twenty-first century to an ill-conceived boom and subsequent bust. It is in danger of losing another decade to the stagnation of an incomplete recovery. How did this happen? Read this lucid explanation of the origins and long-term effects of the recent financial crisis, drawn in historical and comparative perspective by two leading political economists.
By 2008 the United States had become the biggest international borrower in world history, with more than two-thirds of its $6 trillion federal debt in foreign hands. The proportion of foreign loans to the size of the economy put the United States in league with Mexico, Indonesia, and other third-world debtor nations. The massive inflow of foreign funds financed the booms in housing prices and consumer spending that fueled the economy until the collapse of late 2008. This was the most serious international economic crisis since the Great Depression of the 1930s.
Menzie Chinn and Jeffry Frieden explain the political and economic roots of this crisis as well as its long-term effects. They explore the political strategies behind the Bush administration’s policy of funding massive deficits with foreign borrowing. They show that the crisis was foreseen by many and was avoidable through appropriate policy measures. They examine the continuing impact of our huge debt on the continuing slow recovery from the recession. Lost Decades will long be regarded as the standard account of the crisis and its aftermath.
PUBLISHERS WEEKLY
In this important book, which deserves to be widely read and debated, political economists Chinn (The Economic Integration of Greater China) and Frieden (Global Capitalism) argue that the 2007-2009 world financial crisis was made in America, because the U.S. ignored advice about indebtedness that it had given to other countries over the years. The time has now come for Americans to accept the implications of this situation and discuss it with other governments. In Chinn and Frieden's view, it is not debt per se, but what the debt is used for, that is key. They provide historical evidence to support their claim that if debt is invested by the government and private industry to raise profitability, then it is not problematic. This has not been the case in the recent past. Instead debt was used to create a speculative bubble, which led to what the authors call the bankruptcy of the financial system. They make the powerful case that the $12 trillion bail-out of the busted banks has been wasted. Absent a multi-trillion employment and investment program, there are very tough times ahead.