Organizations and Markets

John Gray on the Greenspan-Bernanke Economy

24 September 2009 at 8:47 am Peter G. Klein 1 comment

| Peter Klein |

From Gray’s April 2009 NYRB review of Margaret Atwood’s Payback: Debt and the Shadow Side of Wealth:

Concepts of debt figure centrally in Western religion, while the notion that debt is something to be avoided, or incurred with caution, has long been important in Western capitalism. Without institutions facilitating borrowing, capitalism would not have developed to the degree that it has; but the belief that debt could be dangerous was until recently also an important part of capitalism. It is only lately, Atwood notes, that debt has been celebrated as positively benign, “a thing we’ve come to feel is indispensable to our collective buoyancy.” From being a necessary tool in productive enterprise, debt came to be viewed as an instrument of wealth creation. Using cheap credit, hedge funds and investment banks were able to multiply their profits, while society at large — including some in its poorest groups — came to see taking on large amounts of debt as a way of building up capital. Now that this structure of debt is unwinding, older ideas may be on their way back: “We seem to be entering a period in which debt has passed through its most recent harmless and fashionable period, and is reverting to being sinful.”

Latest news from Washington: “The Federal Reserve said Wednesday that it would keep short-term interest rates near zero for the foreseeable future, even though the central bank acknowledged that the economy was recovering from its long downturn.”

Entry filed under: - Klein -, Bailout / Financial Crisis, Financial Markets.