For half a century before 2008, private credit grew relentlessly as a % of GDP across the advanced economies. Since 2008 there has been no aggregate deleveraging at all – debt has simply shifted from the private to the public sector and across the world from developed to developing countries, in particular China. Lord Turner explains how we are caught in a debt overhang from which there will be no escape without some mix of default, debt restructuring or permanent monetisation.
Adair Turner has combined careers in business, public policy and academia. He became Chairman of the UK Financial Services Authority as the financial crisis broke in September 2008, and played a leading role in the redesign of the global banking and shadow banking regulation as Chairman of the International Financial Stability Board’s major policy committee. He is now a Senior Fellow of the Institute for New Economic Thinking, and at the Centre for Financial Studies in Frankfurt. The Institute for New Economic Thinking is a global economic research foundation committed to the development of real world solutions to the economic and social challenges of the 21st century.
Lord Turner’s book “Between Debt and the Devil - credit, money and fixing global finance” will be published by Princeton Press in October 2015. Visiting Professor Lord Adair Turner warned that the world is caught in a ‘debt overhang’.