Between Debt and the Devil

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Adair Turner, as chairman of Britain's Financial Services Authority during the 2008 global financial crisis, played a pivotal role in reshaping financial regulation. In this insightful book, he clarifies the true causes of the crisis, arguing that it stemmed not from banks being "too big to fail," but from our reliance on private debt. He challenges the notion that credit growth is necessary for economic expansion and that rising debt is acceptable with low inflation. Turner asserts that most credit does not contribute to economic growth; rather, it fuels real estate cycles and leads to financial instability. He advocates for public policy to oversee credit creation and suggests taxing debt as economic pollution. Additionally, he emphasizes the need for banks to hold more capital, restrict real estate lending, and address inequality to curb rising property prices. Turner also dispels the myth surrounding fiat money, arguing that printing money can sometimes be necessary to manage government debt and fiscal deficits. Ultimately, he calls for a reevaluation of the belief that private credit is vital for growth and that fiat money is inherently risky, highlighting the need for a balanced public policy approach.