Debt And Delusion (Hardcover)

by Peter Warburton (Author)

Editorial Reviews

Review
"... a classic 'Financial Reality Bites' read of the highest order." -- John Mackenzie, Safehaven.com, May 8, 2005

"A great book...about this present generation's massive debt...[and] about how Western Civilization has become too dependent on debt." -- David N. Vaughn, Gold Letter, Inc., February 6, 2004

"An undeservedly obscure work of financial economics, Peter Warburton's Debt and Delusion... has become a cult classic among financial contrarians." -- Robert Blumen, Mises.org Daily Articles, August 11, 2004

"What happens if there's an end to this booming economy? That question is clearly answered [in Warburton's] Debt and Delusion." -- J. Tim Thompson, The Trumpet, March/April 2000 --This text refers to the Hardcover edition.

Product Description
There is an unexploded bomb in the global financial system, threatening to bring the greatest disruption to the lives of people since the Depression on the 1930s. This potential explosion has been created by dereliction of duty by the world's largest central banks, which have helped to create an unsustainable illusion of personal wealth and national prosperity, exposing the public to uninsurable risks in the process. This volume looks at how this economic timebomb has been created by unchecked credit expansion and the potential havoc it could wreak.

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Product Details

• Hardcover: 336 pages
• Publisher: Penguin UK (March 1999)
• Language: English
• ISBN-10: 0713992727
• ISBN-13: 978-0713992724
• Product Dimensions: 9.5 x 6.4 x 1.2 inches
• Shipping Weight: 1.4 pounds
• Average Customer Review: 5.0 out of 5 stars See all reviews (5 customer reviews)
• Amazon.com Sales Rank: #1,804,371 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

34 of 35 people found the following review helpful:

5.0 out of 5 stars Good Discussion @ Mises Institute Website, August 12, 2004

By	Ray (Oak Park, Illinois USA) - See all my reviews

This review is from: Debt and Delusion: Central Bank Follies That Threaten Economic Disaster (Paperback)

Robert Blumen discusses Peter Warburton's "Debt and Delusion: Central Bank Follies that Threaten Economic Disaster" at the Ludwig von Mises Institute Website.

"Published in 1999, the work rapidly went out of print but has since become a cult classic among financial contrarians. Although not written from an Austrian point of view, the argument parallels an Austrian view of money and banking in many aspects.  My purpose in writing this article is to present Warburton's main argument and to interpret it through an Austrian lens." -Robert Blumen-

Its central premise concerns the lessons learned from the 1970s when the developed world flirted with hyper-inflation. "Warburton's story begins in the aftermath of Volker's triumph. The conundrum facing governments at the time was: how to enable governments to continue to live beyond their means, without suffering inflationary consequences?"

What follows is a very plausible explanation about how, "Central bankers offered a program to solve this dilemma, the centerpiece of which was a change in the method of financing government debt.   Deficit finance bonds would be sold to private investors through existing financial markets. This would place the bonds in the hands of investment funds, rather than on the books of commercial banks as would have been the case had they returned to the old style of monetization.  The subsequent explosion in the size and breadth of bond markets is illustrated by a few snapshots of gross issuances: less than $1 trillion in 1970; $23 trillion by 1997 and nearly $43 trillion by 2002.

The conundrum:

As he wryly noted:

"Periodic bouts of price inflation, the tell-tale signs of a long-standing debt addiction, have all but vanished.  The central banks, as financial physicians, seem to have effected a cure. . . . Few have bothered to ask how the central banks have accomplished this feat, one which has proved elusive for more than 20 years. As long as inflation is absent, who really cares exactly what the central banks have been up to.

The solution to this puzzling anomaly is to identify the source of demand for government bonds. For this, we must examine "what the central banks have been up to."

"Debt and Delusion argues that the institutional changes...have confined the price adjustments resulting from monetary expansion to the financial system. The character of the 80s and 90s inflation differed from that of the 70s. In recent decades, price changes following money quantity changes have been in stocks and bond prices, rather than wages and consumption goods prices."

Very good read,

(...)

5 of 5 people found the following review helpful:

5.0 out of 5 stars How things got so messed up, December 19, 2008

By	Roebear (PA, USA) - See all my reviews

This review is from: Debt and Delusion: Central Bank Follies that Threaten Economic Disaster (Deluxe Edition) (Hardcover)

If you want to know how the economy got so screwed up, spend some time reading this book and you will know MUCH more than you would in 20 years of watching the talking heads on TV trying to feed you the party line via the news or wall street shows!!

4 of 4 people found the following review helpful:

5.0 out of 5 stars A tour de force, February 28, 2009

By	Conor J. Sen - See all my reviews (REAL NAME)

This review is from: Debt and Delusion: Central Bank Follies that Threaten Economic Disaster (Deluxe Edition) (Hardcover)

If someone were to say to me, "Prove that the 2007-2009 financial crisis had its origins long before George Bush, Alan Greenspan, the 2001 rate cuts, subprime mortgages and greedy Wall Street CEOs" I would have them read this book. Written in 1999, it's staggering how much Peter Warburton, who I had never heard of before reading this book, understood. It's dense but fairly short, less than 300 pages not counting appendices. One of his key insights is explaining how the credit growth of the 1980s and 1990s didn't lead to inflation. Namely, businesses borrowed huge sums of money in order to increase productive capacity, and by increasing supply, prices were held in check. This book should appeal to Austrians and Keynesians alike, which is a rarity for these types of books. Highly recommended.