Thursday, January 19, 2012

Philip Coogan’s *Paper Promises*

Tyler Cowen is promoting Philip Coogan’s *Paper Promises*.

The Amazon blurb reads:
For the past forty years western economies have splurged on debt. Now, as the reality dawns that many debts cannot be repaid, we find ourselves again in crisis. But the oncoming defaults have a time-worn place in our economic history. As with the crises in the 1930s and 1970s, governments will fall, currencies will lose their value, and new systems will emerge. Just as Britain set the terms of the international system in the nineteenth century, and America in the twentieth century, a new system will be set by today's creditors in China and the Middle East. In the process, rich will be pitted against poor, young against old, public sector workers against taxpayers and one country against another.
So, this raises the question of what will happen if America (and the debt-ridden world) does not accept the system proposed by China and the Middle East. I suppose we would be cut off from their credit. I hope that we have the self-respect to do so. Given that the credit offered by China and the Middle East is just wealth that has been looted by those states, we would be morally justified in rejecting it.

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