The Paradox of Debt
A New Path to Prosperity Without Crisis
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- $12.99
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- $12.99
Publisher Description
HOW TO MAKE DEBT WORK FOR US
When we talk about debt and its impact on our economy, we almost always mean 'government debt'. However, this is only a small part of the picture: individuals, private firms and households owe trillions, and these private debts are vital to understanding the economy.
In The Paradox of Debt, Richard Vague shows that the real factor that drives both financial crises and spiralling inequality – but also, paradoxically, economic growth – is ever-rising private debt. The paradox is that while debt is essential and our economy relies on it, it also brings instability unless it is periodically deleveraged – and that is very hard to do. It can, however, be carefully managed, and Vague demonstrates how to do so in areas ranging from trade and housing to financial policy and student debt.
'Richard Vague is a successful banker, brilliant author and contrarian economist with an encyclopaedic knowledge of the history of money and banking, and the parts of economic theory that are worth knowing. No-one else comes close to his blend of professional experience, oratorical flair and critical insights' STEVE KEEN, author of Debunking Economics
PUBLISHERS WEEKLY
"Debt is a paradox. It creates and destroys," contends Vague (The Case for a Debt Jubilee), the former secretary of banking and securities for Pennsylvania, in this dense treatise. Meditating on the contradictory roles debt plays in modern economies, he argues that it's "required for economic growth" even as it raises the risk of economic crashes. According to Vague, debt in the form of loans effectively "creates" money that in turn provides the incentive to boost supply, expanding the economy. The author cautions that overestimating the return on loans or extending credit to those unlikely to pay it back leads to calamity, a point he illustrates by describing how irresponsible lending practices and unrealistic predictions of the housing market caused the 2008 financial crisis. Vague also explains that "debt creates greater inequality even as it creates greater overall household wealth" because the highest income brackets enrich themselves by lending to lower-income households, driving up total wealth when viewed in aggregate. Vague's recommendations to grow the economy without creating more debt by increasing debt forgiveness and regulatory scrutiny of runaway growth are well considered, but the reliance on detailed charts and graphs to illuminate complex financial matters will make things difficult for lay readers. This is best suited for the college classroom.
