- Hardcover: 320 pages
- Publisher: Princeton University Press (October 20, 2015)
- Language: English
- ISBN-10: 9780691169644
- ISBN-13: 978-0691169644
- ASIN: 0691169640
- Product Dimensions: 6.2 x 1 x 9.5 inches
- Shipping Weight: 1.6 pounds (View shipping rates and policies)
- Average Customer Review: 25 customer reviews
- Amazon Best Sellers Rank: #805,427 in Books (See Top 100 in Books)
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Between Debt and the Devil: Money, Credit, and Fixing Global Finance Hardcover – October 20, 2015
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Whether you agree with Turner's proposal or not, [Between Debt and the Devil] represents an important challenge to economic orthodoxy, which, as he rightly notes, has already failed us once.---John Cassidy, The New Yorker
Extensively researched and well-written.---Edward Chancellor, Wall Street Journal
[A] remarkable new book.---Will Hutton, Observer
Lucid and forcefully-argued.---Peter Thal Larsen, Reuters Breakingviews,
Turner offers a convincing account of the debt-fuelled global economic cycle of the last 15 years or so. I found myself skimming over large sections and nodding in agreement.---Erik Britton, Management Today
An overdue challenge to a taboo against monetary finance held sacred for too long.---Giles Wilkes, Financial Times
From the Back Cover
"This is a superb book. A must-read for anyone interested in understanding the unhealthy relationship between debt and the modern economy."--Atif Mian, coauthor of House of Debt
"This is the most penetrating analysis of the inherent imperfections of our financial system to appear since the crash of 2008. It will and should provoke extensive debates about the policies needed to avoid future crises."--George Soros
"Adair Turner is a writer who thinks unusually deeply and is prepared to follow his answers to their logical conclusion, however unsettling. Here, he offers a set of proposals for financial reform that are radical yet practical. As the global financial crisis recedes and the danger mounts that the momentum for change will be lost, we can only hope that the world heeds Turner's clarion call."--Barry Eichengreen, University of California, Berkeley
"Turner's fresh and deep insights into our financial system come with the expertise of an insider. Between Debt and the Devil is a landmark in monetary economics, with profound implications for policy reform."--Joseph E. Stiglitz, Nobel Laureate in Economics
"A masterwork! Insightful, scholarly, and persuasive. Adair Turner has provided a convincing analysis of what has gone wrong before, and what could go wrong again, among the intertwined complexities of money, credit, and misguided theories of finance."--Paul Volcker, former chairman of the U.S. Federal Reserve and the U.S. Economic Recovery Advisory Board
"Between Debt and the Devil is a devastating critique of the banking system and a powerful intellectual challenge to conventional wisdom. A splendid book."--Robert Skidelsky, author of John Maynard Keynes, 1883-1946: Economist, Philosopher, Statesman
"Stunningly thorough yet highly readable, Between Debt and the Devil is a thoughtful and deeply researched book that covers all the policy angles on debt in advanced economies, from the problems in regulating credit binges to the challenges of dealing with their aftermath."--Kenneth S. Rogoff, coauthor of This Time Is Different: Eight Centuries of Financial Folly
"Between Debt and the Devil is a wide-ranging and highly ambitious book. Turner presents an alternative way of thinking about financial economics."--Alan D. Morrison, coauthor of Investment Banking: Institutions, Politics, and Law
"Original and powerful. In a crowded field, this book stands out."--Robert Pringle, author of The Money Trap: Escaping the Grip of Global Finance
"Turner's book augments the growing literature that lays bare the realities of boom and bust, bubble and crash, and the recurrent coordination failures that characterize financial history. Between Debt and the Devil will enrich debate among both academics and policymakers."--William H. Janeway, author of Doing Capitalism in the Innovative Economy
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Mr. Turner starts with the observation that debt has nonlinear benefits with respect to GDP generation and that in particular the initial benefits of aggregating savings so that large scale investment becomes feasible leads to saturated credit markets in which lending predominantly gets funneled into real estate. The author focuses on the changing benefits of credit intensity and makes the observation that excessive debt leads to financial fragility and therefore should be considered to have negative externalities. This view is fundamental to the prescriptions that follow. The author discusses concepts like bank capital requirements and the benefits of higher capital requirements but views the issue from the lens of credit creation rather than too big to fail. The author focuses on the problems of private credit creation and how there is not one equilibrium rate and therefore inflation targeting monetary policy can fail to focus sufficiently on financial fragility that is affecting asset rather than goods inflation. The book covers a lot of ground and looks at these issues including ideas from Minsky, Rajan and Friedman among others. The author brings the idea of nominal GDP targeting as a partial solution to the avoid the cycles of credit creation induced boom bust. The author also brings up the idea of debt forgiveness to reduce some global inequality issues alongside helicopter money and explicit monetization of government debt if there is excess capacity. None of these are trivial and have major repercussions to the modern economy.
Between the Debt and the Devil focuses on the problems of high credit intensity economies when credit intensity is concentrated in real estate which is not productivity enhancing. There is no question that asset backed lending rather than investment based lending can be dangerous and Minsky has written extensively on the subject and the endogenous problems of money creation. Whether the more radical solutions proposed are necessary and or sufficient is not easy to analyze given the complex interrelationships involved. What can be said though is the tax benefits associated with debt issuance which were used as policy at a point when the credit intensity of the economy could easily support credit fuelled GDP growth should be different when the credit intensity of the economy reverses those initial benefits. Current tax policies and lending practices should incorporate macro prudential concerns as what might make sense for the individual lender could lead to adverse consequences at the economy wide level. This lesson is well taken from the book, others one should be more careful about believing wholeheartedly. But interesting read and some fresh ideas.
Most importantly, Adair Turner was a heavy weight insider when the crisis hit. He is not another rebel from the outside with theories hacked in his own basement. If you have long been convinced that "the system is rigged" you will learn nothing new from this book, and you will probably dismiss it as way too conservative. If, however, you are looking for possible and likely policy change to prevent deep recession and, perhaps, the next big crash, Adair Turner is your man. He comes from the orthodox banking circles, although he has arguably placed himself somewhere near the exit lately. Chances are that someone powerful is still listening to him.
As for the suggested remedies in the book, the most radical is probably money printing. Taboo with central banks and governments alike, Turner makes a strong case for its moderate implementation, even within the paradigm of "central bank independence". Yes, and with little or no inflation too.
Turner’s real strength is the directness of his argument, and the relative brevity of his writing - unlike many post-crisis tomes, this book is reasonably short - and much of the familiar ground can be skipped. He correctly frames the current global macroeconomic problem as how to generate growth without ever-rising debt - public or private. He also gets close to reaching the right answer: no well-organised free-market economy which can print money should ever have a persistent shortfall in demand. Turner recommends that central banks should “monetise budget deficits”, which amounts to financing budget deficits by printing money, rather than issuing bonds. Perhaps what is most significant, is that a supposedly radical policy is being endorsed by someone at the heart of the establishment - after all, Turner was Chairman of Financial Services Authroity (FSA) and may well have been Governor of the Bank of England, had the Canadian rockstar not been available.
The need for genuine innovation in macro policy making is a clear theme. Turner should be applauded for this. But disappointingly, he fails to consider the range of institutional options which are available - printing money can take many forms: framing and institutional structure is a critical factor. The serious proposals on the table include giving central banks the power to make cash payments to households, subject to their inflation target; steeply negative interest rates and abolishing cash; and cooperation between the fiscal and monetary authorities. Adair Turner only really considers the latter, and without much detail. The relative merits of these policies deserve far more extensive consideration.
Eric Lonergan Author of Money (second revised edition)