Free Economic Inquiry Under Attack Worldwide

Freedom of speech regarding debt, economics and national solvency is under international assault. 

Here's a great overview of the situation in Europe. If you recall, independent ratings agencies (like Fitch) evaluate the quality of debt. Using that rating, central banks, insurance companies, pensions and other organizations make investment decisions based on that rating. These agencies, using tried and true methods, are downgrading debt (there's too much of it and not enough growth, making payback less likely) and this is upsetting people. 

For example, Italian police raided the office of a rating agency that downgraded Italian on a minor pretext (that story is in article link above).


The European Central Bank is also contemplating rating the quality of its own debt and is making noises about limiting the ability of others to comment on the bank's solvency.


In America, Egan Jones (a mid-sized rating firm) was lowered its ratings on American debt.  Immediately following this downgrade, the SEC coincidentally(?) started a harsh investigation of Egan Jones based on a minor technicality and threatened to revoke its ability to issue ratings on government debt.

Not government debt per se, but on the subject of free commentary on economics:

In Argentina, the government has threatened to exorbitantly fine economists who question official inflation numbers.

Read the articles and decide what this means for yourself.

Book Review: Debt and Economic Renewal in the Ancient Near East

I've been thinking a lot about the implications of debt so I turned to financial history.

So I found this book Debt and Economic Renewal in the Ancient Near East. It's a collection of well-written essays about debt in (mostly) Mesopotamia. The ideas of credit, debt, and private ownership of land (obviously related to the first two ideas) were just getting started.

If you invent debt, then un-repayable debt will soon follow. Mesopotamia dealt with this problem with the concept of the debt jubilee - the forgiveness of debt by the king, usually the first act of the new king to engender goodwill.

But was it an altruistic gesture? We can never know, but scholars speculate that jubilee was more about keeping men available for army service instead of forever laboring on their debt.

The main heading for our books on debt is located here.  Features research on the history of debt and primary resources.

Debt and Economic Growth: NBER Working Paper

Came across this fascinating working NBER paper from heavy hitters Carmen Reinhart, Vincent Reinhart and Kenneth Rogoff entitled "Debt Overhangs: Past and Present."

The authors examine if high levels of debt impact economic growth. The answer is yes, making it hard to grow out of debt. You either take 20 years of stagnation to come out of the debt hole or there is a  cataclysmic event (probably related to the failure of the previous status quo) such as war or collapse that resets the system.

The authors use data from several advanced economics, tracking the amount of debt relative to GDP and how long subpar economic growth persisted.

By the way, we have the NBER database of working papers available here. Can't get it for free on the internet.

Consumer Credit and Debt: Current and Historical Data

Understanding credit and debt is the key to the modern economy.

So, here are some multi-year statistical series out there for you. Things like credit outstanding, amount used, and more.

(The following are .gov sites)

Consumer Credit and Payment Statistics (streamlined presentation of Fed data below)
Consumer Credit and Finance Company Data from the Fed
Personal Savings
Flow of Funds from the Fed Reserve (measures households)
Consumer Credit Out There

You can also search FRED, the data machine from the St. Louis Fed. A pre-done search for all results with "credit" is here.

And

Here is our collection of books, optimistically called consumer credit in our official library speak. Bankruptcy and Personal Finance are also good subject headings.

Weblink to Niall Ferguson Explaining Financial Crisis Background

Niall Ferguson is a popular historian that's hosting an excellent series on PBS entitled The Ascent of Money.

Lotsa cool stuff about the role of money and credit in shaping society and Niall makes it easy to follow. Recommended for you to get a sense of how this stuff works in real life.

You can watch the entire 4 part series on the official PBS web site here.

Part Four is dedicated to the current financialization crisis.