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When we talk about debt and its impact on our economy, we almost always mean “government debt.” However, this is only a small part of the picture: individuals, private firms, and households owe trillions, and these private debts are vital to understanding the economy.
In this iconoclastic book, Richard Vague examines the assets, liabilities, and incomes of the entire country, private and public sector, to reveal its net worth. His holistic analysis shows that the real factor that drives both financial crises and spiraling inequality—but also, paradoxically, economic growth—is ever rising private debt. The paradox is that while debt is essential and our economy relies on it, it also brings instability unless it is periodically deleveraged—and that is very hard to do. It can, however, be carefully managed, and Vague ends the book by showing how to do so in policy areas ranging from trade and housing to financial policy and student debt.
Underpinned by pioneering data analysis and the author’s lifetime of experience in the financial world, this book is essential for anyone who wants to understand the deep, underlying dynamics of the American economy.
Following a career that has spanned fields as varied as banking, energy, credit, and the arts, Richard Vague has recently served as Secretary of Banking and Securities for the Commonwealth of Pennsylvania. He is author of numerous books, including An Illustrated Business History of the United States, also available from the University of Pennsylvania Press.
"Richard Vague is a rare combination of scholar, practitioner, and communicator. In The Paradox of Debt he provides an essential guide to the modern economy that can be read with profit and pleasure by citizens and policymakers alike."—Michael Lind, author of The New Class War: Saving Democracy from the Managerial Elite
"Richard Vague is this century’s incarnation of Walter Bagehot, Charles Mackay, and Charles Kindleberger, all in one: a successful banker, brilliant author, and contrarian economist with an encyclopedic knowledge of the history of money and banking, and the parts of economic theory that are worth knowing—above all the contributions of Hyman Minsky. No one else comes close to his blend of professional experience, oratorical flair, and critical insights."—Steve Keen, author of The New Economics: A Manifesto
Winner of the PenCraft Awards for literary excellence, in the Non Fiction - Gov/Politics category