ABSTRACT
In recent years, the world economy has been lurching from crisis to crisis, amid a general deterioration in economic conditions for millions of ordinary people in the developed world. This book is intended to help the reader understand why these things are happening. It explains what money is, and how credit and debt arise in a modern economy. It shows how existing mechanisms of credit and debt creation and distribution have led to ever-increasing concentrations of wealth in the hands of a small minority, as well as ever-higher debt burdens on governments and ordinary people, and how excessive private debt accumulation eventually leads to financial crises, economic stagnation or depression. After explaining the essence of how the monetary system works, this book provides some guidance on what could be done to stimulate economic activity while concurrently overcoming the problem of excessive accumulated debt, with special attention to the European context. Before we launch into the main body of the text, let’s begin by sketching, in this introduction, some of the macroeconomic problems the world faces. We’ll also briefly address the question of why so many economists didn’t see the global financial crisis coming – and why existing policy prescriptions for overcoming Europe’s economic stagnation are flawed.
