This book is rated five stars not because it is perfect. It is not. There are instances of flawed analysis, and a couple instances of embarrassing proof-reading accidents.
However, the author's analysis of how debt everywhere - national governments, state governments, local governments, and personal- has grown like cancer for forty years, and now will control our financial future and that of our children and grandchildren, is an absolute must-read for every responsible adult. The list of chapter headings gives a flavor of what is to come: "Paper Promises"; "Riding the Gravy Train"; "Blowing Bubbles"; "The Ponzi Scheme Needed a New Set of Suckers", etc.
Philip Coggan is former investment editor of the "Financial Times", and long-time columnist for the "Economist". He therefore has a nose and instinct for digging at the facts to get to the story, and the writing skill and experience to report the story in ways that the lay reader can follow. This is just as well. The topic of debt and finance is, for most of us, rather dry and removed from what we think about on a daily basis. However, decisions made by those before us to accumulate debt, and decisions we are making now, bind us and our children to a constrained future. Mr. Coggan's economics is, however, not as strong as his reporter skills.
Mr. Coggan writes, "If there is a fundamental theme to this book, is is that there are no easy answers in economics". We certainly agree with this.
We have a huge, self-inflicted problem: In the last forty years, the entire world has been more successful at creating claims on wealth than wealth itself. In other words, we have lived beyond our means. We have amassed huge debts, which cannot ever be repaid in real terms. We have, in essence, "bequeathed our debts to our children". None of us would go to a nice dinner, and tell the headwaiter to send the check for our dinner to our unborn grandchildren to pay. Yet, that is exactly what the entire developed world has done, in a very serious way, for decades. There will be a price to pay. The long term effects of this ocean of debt must be either inflation, stagnation, or default (or, likely, a combination of all three).
Austrian economists will cringe, however, at Mr. Coggan's continued reverence for Keynes. Many blame Keynesianism and perversions of it for getting us here in the first place. However, Mr. Coggan falls into the Keynesian trap of believing we need to fear savings, not spending on things we do not need: "As Keynes pointed out, money saved, rather than spent, reduces demand for goods and thus employment". Many would argue that this is exactly wrong: money spent on things we do not need, especially money borrowed, is the root of our current debt problem.
It is here we part most dramatically from the author. He does not see a good solution to the problem of too much debt, except, apparently the Keynesian tactic of taking on more debt to keep the spending going. There are those, however, who would argue the solution is to get rid of debt, sooner rather than later, so our economies can breathe and grow again. How this is done, and who pays, is part of all our futures.
Somewhat tough sledding here, some flawed analysis in this writer's opinion, but a good lay discussion of an absolutely critical issue affecting all of us.