“Between Debt & The Devil”. An interview with Adair Turner, and a chance to win a copy of his book.

I spoke to Adair Turner last week about his new book, “Between Debt and the Devil”.  You can see my interview with him below.

 

Early in 2012, as the UK struggled to escape recession, I asked the question “if the government simply cancelled the £300 bn+ of QE gilts held by the BoE, who would be unhappy?”.  Would that have really let an inflation genie out of the bottle?  I argued that even if inflation did return, the central bank still had plenty of ways of tightening monetary policy.  The biggest argument for not cancelling the QE gilts in my view was that it would be regarded as Zimbabwean, and therefore have a damaging impact on credibility.  Adair Turner’s excellent book argues that whilst you can point to Zimbabwe or Weimar Germany as examples of money printing going bad, there are some successful and credible examples too.  The new economic literature argues that it is necessary in an over-indebted world to print money if the alternative is high unemployment.  Additionally, Turner’s book is very critical about the reliance of debt to fuel modern rates of growth – debt is, in his view, a pollutant that should be taxed and managed just as we would manage industrial waste.  Finally at the end of my interview you can see what Lord Turner had to say about Jeremy Corbyn’s “People’s QE”.

Now, our competition.  We have 10 copies of “Between Debt and the Devil” to give away to randomly selected winners who can answer this question:

The idea that governments can, and should, print money to stimulate economies rather than tolerate high unemployment comes from the theory known as MMT.  What does MMT stand for?

To enter, email your answer to bondteam@bondvigilantes.co.uk

The closing date is Wednesday 2nd December at midday UK time.  Terms and conditions can be found here. Good luck.

Discuss Article

  1. Peter Jones says:

    Adair Turner has to be applauded. I have long thought that Keynes needs to be rewritten to become the General Theory of Employment, Interest, Money, and Debt. The question that has to be answered is: how much debt can be afforded? The big lesson of the financial crisis which began with the sub-prime mortgage crisis was that the debt run up in sub-prime mortgages could not be afforded when the two-year teaser rate period ended. No amount of slicing, dicing and distributing the debt through various collateralised obligations could ultimately avoid that fact and yet the financial world behaved as though it could, a belief that was revealed as false when the value of the underlying assets collapsed and debt had to be written off, or socialised with the bank bail-outs. So the question of what the debt ceiling should be is related not just to the ability to service it, but also to the potential low value of the assets on which it is based. I wonder if the same process is about to happen with commodities. Since the value of commodities has sunk, and a lot of debt was based on previously high values, are we about to experience a sub-prime commodity crisis?

    Posted on: 25/11/15 | 12:03 pm
  2. Connie says:

    Why can HMG simply reduce income tax (or VAT) rates to put more money into the pockets of consumers. This would boost consumer spending and demand without monetary gimmicks. Also, surely such adjustment to tax rates is more controlled and predictable in terms of disposable income fed back into the economy (and ultimately back to HMG) versus initial loss of tax revenue to HMG? With our economy continuing to do well surely this would support reduction to tax rates – particularly to the lower tax bands where majority of people struggling to get by are likely to be?

    Posted on: 27/11/15 | 2:19 pm
  3. Jim Leaviss says:

    Thanks for all the entries to our competition. The 10 winners of Adair Turner’s book are listed below.

    Katie Trowsdale – Standard Life investments
    Matthew Campbell – Barclays
    Rupert Howell – InTouch Capital Markets Ltd
    Mark Goldman – Nucleus Commerical Finance
    John McLaughlin – Brewin Dolphin Ltd
    Dave Warren – Charlwood IFA
    Karim Sambrana – BNP Paribas
    Colin Donlon – FutureFocus Advisory Limited
    David Smith – Hargreaves Lansdown Fund Managers Ltd
    Chris Gilchrist – Five Ways Financial Planning

    Posted on: 02/12/15 | 2:19 pm

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