Monday, June 18, 2012

#169 / Paper Promises








It looks like Paper Promises should go on my "books to read" list. I found the review in The Nation to be quite compelling. 
One of the lessons of the book, as I understand it from the review, is that the world's economies are unlikely (and in fact unable) to "grow" themselves out of their current debt status, which means that a "default" on those debts is inevitably coming. 
I have never been a big fan of debt, and believe that our addiction to debt has, in fact, been one of the main drivers of the destruction of the world environment, as we are enabled to "consume" more than we can actually afford, and certainly more than is good for us. In my view, the only excuse for going into debt (which means spending more than you earn) is if the money you borrow is used for a genuine investment in future productivity, and/or for the purchase of something (like a primary residence) that is essential for social stability and good health. 
Borrowing money as a way to facilitate consumption you couldn't afford on your current income can only lead to over-consumption and the impoverishment of future generations. It also leads to what is sometimes dramatically called "debt slavery," which is an actual condition affecting most people today. It is also a condition affecting most societies. 
Coggan apparently "blows the whistle" on the kind of debt that is untethered to any tangible reality. It's musical chairs. And when the music stops, only 1% of the people get to sit down. 
Luckily, we can do something about that! But we better change the rules pretty quick. Right now, no banker is left behind. And that is not my idea of fair.

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