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Paper Promises

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Paper Promises

Debt, Money, and the New World Order

Public Affairs,

15 min read
10 take-aways
Audio & text

What's inside?

When money’s not worth the paper it’s printed on, you (and the rest of the world) are headed for trouble.

Editorial Rating



  • Eye Opening
  • Well Structured
  • Background


You don’t think twice about handing over pieces of paper and bits of metal to pay for your purchases. Nor do retailers question accepting these seemingly simple, pedestrian items in exchange for goods and services of value. You have faith that your money is good, and so does the entire global economy. But what happens when that confidence falters? Journalist Philip Coggan traces humanity’s longstanding use of paper money and coins and explains how that practice led inexorably to the massive indebtedness that now threatens the economic lives of everyone on the planet. His book is instructive from a historical perspective and provides a thorough background review, but it offers little new to readers schooled in modern macroeconomics. His prescriptions for the “new world order” appear as a brief afterthought, with only a few well-worn opinions on next steps the global economy should explore. Still, getAbstract finds this thorough review of the history of money useful for those new to the topic and for those who wish to know how the world has enslaved itself to debt.


Owing Big Time

The Western world is awash in debt. Some nations have borrowed three to four times their annual economic product. They can never repay debt of that magnitude; even servicing their debt will overload most developed nations, which already face aging populations and decreasing productivity. Countries will have few choices when it comes to their obligations: They will default or “inflate the debt away.” Either way, creditors – whether private individuals, financial institutions or governments – are in for some bad times.

The rise of paper money – currency without the backing of a hard material like gold or silver – has primed the borrowing pump. Because governments control their money supplies and can issue more money at will, they can borrow with abandon. They benefit from creditors’ confidence in their ability to repay, but given the total debt outstanding, that confidence may soon dwindle.

The United States “is now the world’s largest debtor nation,” but it is also the globe’s biggest economy and maintains the main reserve currency. Given that, any shift in global confidence will affect every country, especially China, which holds so much of America...

About the Author

Philip Coggan wrote for the Financial Times for 20 years. Now he blogs as “Buttonwood” for The Economist.

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    L. F. 7 years ago
    No new insights. Would have liked to have seen the author dig deeper into the consequences of rising debt and the corresponding rise in banks excess returns and come down more firmly on the likely outcome; inflation, deflation or default

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