Adair Turner sets the record straight about what really caused the global financial crisis in 2008: it didn’t happen because banks are too big to fail – our addiction to private debt is to blame.

He challenges the belief that we need credit growth to fuel economic growth, and that rising debt is okay as long as inflation remains low.  In fact, he argues, most credit is not needed for economic growth—but it drives real estate booms and busts and leads to financial crisis and depression.

He explains why public policy needs to manage the growth and allocation of credit creation, as well as why debt needs to be taxed as a form of economic pollution. He shows why we need to reject the assumption that private credit is essential to growth and fiat money is inevitably dangerous. Each has its advantages, and each creates risks that public policy must consciously balance.

Adair Turner

Adair Turner has combined careers in business, public policy and academia. He became Chairman of the United Kingdom Financial Services Authority as the financial crisis broke in September 2008, and played a leading role in the redesign of the global banking and shadow banking regulation as Chairman of the International Financial Stability Board’s major policy committee. He is now Chair of the Institute for New Economic Thinking. Prior to 2008, Lord Turner was a non-executive Director at Standard Chartered Bank (2006-2008); Vice Chairman of Merrill Lynch Europe (2000-2006); and, from 1995-1999, Director General of the Confederation of British Industry. He was with McKinsey & Co. from 1982 to 1995. Lord Turner became a cross-bench member of the House of Lords in 2005 and was appointed Chair of the Climate Change Committee in 2008, stepping down in 2012; he also chaired the Pensions Commission from 2003 to 2006, and the Low Pay Commission from 2002 to 2006. He is now Chairman of the Institute of New Economic Thinking. He is the author of Just Capital – The Liberal Economy (Macmillan, 2001), and Economics after the Crisis (MIT Press, 2012), and holds Visiting Professorships at the London School of Economics and at Cass Business School, City University. He is a Trustee and Chair of the Audit Committee at the British Museum.