RadioWhoWhatWhy: Former Top Banker Believes $10 Trillion in Private Debt Will Trigger Next Financial Meltdown

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1If you did a Google search for stories about the 2008–2009 financial crisis, you’d find that the vast majority focus on public and government debt—and government spending. This has been, for almost 40 years, the mantra of many in Washington.

And yet we know, that our most recent financial crisis, was at least, in part, triggered by the mortgages crises and massive amounts, (almost 10 trillion dollars) of private mortgage debt. So why haven’t we talked more about this? What is the nexus between private debt and public debt, why is no one talking honestly about it, and what does it say about our current economic outlook?

That’s what Richard Vague looks at in his conversation with WhoWhatWhy’s Jeff Schechtman. Vague has seen this crisis from the inside as a former CEO of two major credit card companies—First USA and Bank One.

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0 responses to “RadioWhoWhatWhy: Former Top Banker Believes $10 Trillion in Private Debt Will Trigger Next Financial Meltdown”

  1. planckbrandt says:

    It is OK this interview. But, there need to be other points of view. He has a very limited professional point of view. People inside the system see it a certain way. We need to hear from voices outside the system looking in and bringing with them other points of view like history or anthropology. People trained in finance and economics will be the last ones to see the train coming and bring on the new paradigm. The Keen Krugman debate is one way to start to look at the alternative view about all this debt and the debt money system itself. The Bank of England 1Q2014 publication clarifying how money is created is also another entry point to the emerging paradigm about new money forms that don’t work the way this one does.

    The fact is that private debt equals money in this system. That sad point never came up in this interview. Some critics say there are so many dollars out there flying around now after 10 years of cheap lending that when those dollars all come back here we will see prices rise quite rapidly and unexpectedly. We also have to look at the level of reserves now in the Federal Reserve Base money report after all the QE. We’ve never seen reserves at these levels. And all those reserves represent potential money the banks can create as debt. These charts begin to show the next questions to ask.