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The books discussed here each use history to examine the conundrum of debt as both a necessity and a potential problem

In 1931: Debt, Crisis, and the Rise of Hitler, economic historian Tobias Straumann of the University of Zurich offers an impressive, fast-paced narrative account of the crucial phase in Germany’s Great Depression, underscoring the point about consensus and the politics of debt

Breaking with what has become conventional wisdom, Straumann does not see the politicians of the Depression era – particularly Heinrich Brüning, known as the “Hunger Chancellor” – as having made bad choices in pushing austerity when they did. 

The burden of external debt (in the form of war reparations) played a critical role in creating these political conditions. As Straumann shows, it was Adolf Hitler’s campaign against a new reparations program (the 1929 Young Plan) that brought the National Socialists back from the political wilderness. 

 Adam Tooze, who has also written extensively on Germany and the interwar failures, has produced a genuinely global narrative chronicle of the explosion of central bank-financed debt in response to the COVID-19 pandemic.

His approach in Shutdown reprises that of Crashed, his 2018 account of the 2008 financial crisis; but, for obvious reasons, the new book lands in the middle of the events it examines, like a history of WWI written in 1915.

Tooze’s basic framework is borrowed from a schema outlined by Chen Yixin, the secretary-general of the Communist Party of China’s Central Political and Legal Affairs Commission. 

MMT is applicable only in countries that have full monetary sovereignty

Markus Brunnermeier’s The Resilient Society explicitly asks how long the apparent free lunch of low-to-zero-cost debt can continue. 

As OECD Chief Economist Laurence Boone warns, “it’s not free money forever.” In a striking passage, Brunnermeier suggests that government debt is not just financial rocket fuel, as Tooze has it, but also “essentially a bubble,” a Ponzi scheme.

Ludger Schuknecht’s Public Spending and the Role of the State offers valuable historical lessons   He argues that a low-interest-rate environment may obscure the necessity of choosing how and how much to invest in the future. 

In the moral view, public debt is bad, as it represents a burden that current generations pass on to the unborn. In the high-minded political view, debt in democracies is good, because it creates solidarity. And in the low-minded political view, it is good because it wins elections and brings other rewards.

Harold James Project Syndicate 8 October 2021


Tooze’s implication is clear: The West has no systematic ability to prevent or effectively fight large-scale crises. Our political systems are broken by cultural division and, in Tooze’s view, hamstrung by outmoded economic principles.


Between 1930 and 1932, in the middle of the Great Depression, Brüning cut spending, increased taxes and rolled back the social safety net.


The Young Plan


What We Owe Each Other


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