A day does not go by without numerous headlines on the rampant debt problems facing the global economy. From Greece's organized default to the sovereign debt problems facing other European nations, to the budget battle right here at home between President Obama and members of Congress, people cannot escape reading about these crises.
We live in a world burdened, or crippled, by debt. That is today's reality. But according Philip Coggan, author of Paper Promises: Debt, Money and the New World Order, the current state of indebtedness is nothing new, nor is it going anywhere fast.
"Over time we have had many debt crises like this before, this is not just about the collapse of Lehman Brothers," he tells The Daily Ticker's Daniel Gross in the accompanying interview as they discuss the premise of his book. "Over history many monarchs have defaulted on their debts and many other governments have defaulted on their debts. When things are going well, people are more confident about lending money and people are more confident about taking on debt," he says. This leads to a steady economic boom which causes prices to rise. Eventually, businesses and individuals become over-leveraged to keep up with those rising asset values.
In the accompanying interview, Coggan, who is also a columnist for The Economist, refers to the more recent examples of U.S. debt crises that occurred in the 1930s and 1970s, such as the abandonment of the gold standard and fixed exchanged rates. Both instances resulted in the in devaluation of the U.S. dollar.
He predicts the current debt crisis will rage on for the next 10 or 20 while tensions rise between creditors and borrowers, pitting the have-and have-nots against each other, as well as the old against the young, the rich countries against poor countries.