Lord Adair Turner, Chairman of the Institute for New Economic Thinking and former Chairman of the UK Financial Services Authority visited the Oxford Martin School on Tuesday 24 November for a talk on his new book, ‘Between Debt and the Devil: Money, Credit, and Fixing Global Finance’ (Princeton University Press).
Introducing Lord Turner, Eric Beinhocker, Executive Director of INET Oxford, said the book was "the most holistic analysis of the crisis written to date, asks fundamental questions and offers radical answers".
During the event Lord Turner discussed whether our economy has become dependent on debt-fuelled bubbles for growth, whether crises will become more common in the future as technology makes growth less capital-intensive and gives greater scarcity value to prime real estate, and how rising inequality both causes and results from debt bubbles.
He then put forward a number of solutions that go well beyond current reform efforts including significantly raising capital requirements for banks. Lord Turner said: "Bank capital requirements should be set higher, somewhere around 20 percent. Left unregulated, the banking system will create too much of the wrong sort of debt." But his most controversial proposal was to, in limited circumstances, allow central banks to provide outright monetary financing of fiscal deficits to help countries escape the traps of debt overhangs and deflation, such as the trap Japan has found itself in.