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Niall Ferguson: A Checkup on Global Financial Health

Finance historian Niall Ferguson joins us for a step-back look at the global economy and America’s economic staying power.

The view before a stock price indicator in Tokyo, June 21, 2010. (AP)

Bigfoot historian Niall Ferguson made his name with a fearless readiness to speak to history and our moment in it in the biggest terms.

If you want to talk about the rise and fall of empires – Roman, American, British, Soviet – Ferguson’s your man.  Now he’s followed history right into the middle of a raging debate over whether we need more stimulus spending right now, or need to slam on the spending brakes to avoid a system collapse.

Ferguson’s a hit-the-brakes man.  He dukes it out with Paul Krugman

This Hour, On Point: Niall Ferguson’s big take on where America stands now, and how to avoid the fall.


Niall Ferguson is professor of history and business administration at Harvard University. He’s also senior research fellow at Jesus College at Oxford University, senior fellow at the Hoover Institution, and author of “The Ascent of Money: A Financial History of the World.” His other books include “Empire,” “Colossus,” “The War of the World,” and “Virtual History.” He’s also a contributor to the Financial Times. His new book, out this week, is “High Financier: The Lives and Time of Siegmund Warburg.”


“Fear the Boom and Bust” illuminates the centuries-old schism between two schools of economic theory, in nerdcore rap:

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  • Todd

    Wouldn’t “A Checkup on Global Financial SICKNESS” be a more apt description? Open wide and say “Ahhh”!

  • JP

    It is safe to say that if there were no Fannie and Freddie we wouldn’t have this crisis. It is also clear that politicians are refusing to let go of their pet project since financial reform doesn’t even touch these organizations. They should both go bankrupt and we should refuse to pay the 1-2trillion dollars to cover their losses.

  • jeffe

    It is safe to say that if there were no Fannie and Freddie we wouldn’t have this crisis. It is also clear that politicians are refusing to let go of their pet project since financial reform doesn’t even touch these organizations. They should both go bankrupt and we should refuse to pay the 1-2trillion dollars to cover their losses.
    Posted by JP

    While Fannie and Freddie Mac are knee deep in the housing crisis this statement also points to how some people just spend a lot of their time looking for scapegoats instead of trying to understand what really happened. There is also the subtext of blaming poor and middle class people for the economic downturn that was designed and executed by wall street and poor regulatory oversight. AIG caused more damage to the economy than Fannie and Freddie, but that’s not the point. There is enough blame to go around here for every major financial institution.

  • Ann

    I’ve never read Marx, but I wonder if THIS is what he said:

    Feudalism ends. Capitalism begins — just when Colonialism goes worldwide. With Colonialism came Slavery (not just of your captured enemies) with free labor, except for “the investment” made by the owners. When THAT ended, Jim Crow kept African-Americans in an economically exploited position for 100 years. THINK ABOUT IT: “Globalism began a MERE FIFTEEN YEARS after the legal end of Jim Crow with the Civil & Voting Rights Acts in 1964-65. WHY? Because African-Americans were going to have greater access to better-paying jobs. Women were FINALLY given jobs they’d been denied earlier in the 1970′s, because they could be paid less than men, NOT because they demonstrated in the streets, but they WERE demanding equal pay & Big Business knew it! Then NAFTA began, but Latin American workers, working in their own countries, were soon abandoned for less expensive Asian workers, who now supplement the trickle, or flood, depending on your P.O.V., of illegal workers who come HERE from Latin America, but also from around the world, hired by illegally-acting American business owners.

    I FEAR THAT THIS TRAJECTORY OF EMPLOYERS LOOKING FOR THE CHEAPEST LABOR IS A CENTRAL COMPONENT OF CAPITALISM. It is NOT NEW; it has been in place since the beginnings of Mercantilism & Capitalism. In my view, until we have a Social Democratic system, like the Scandinavian models, we will be a growing nation with NO growth and NO safety net except for the exceptionally wealthy few!

    AMERICA WAS A SLAVE ECONOMY AND A SLAVE SOCIETY UNTIL THE END OF THE CIVIL WAR. I CONTEND THAT THE JIM CROW YEARS WERE NOT MUCH DIFFERENT (and we KNOW there was PEONAGE slavery until the 1940′s, I think: Slavery By Another Name by Douglas Blackmon)!!! Our greatest growth came during our time of GREATEST exploitation! NOW, more Americans are seeing just how that works, tho with a slightly different twist.

    The PART of our economy that cyclically goes up or down with ANY global significance is ONLY the FINANCIAL PART, where MONEY MAKES MONEY. Even IF there HAS to be a segment of the economy that IS financial, our current situation is UNHEALTHY BECAUSE IT IS NOT BALANCED! It is like a body ONLY having a nervous system, while all the other systems are dying off.


  • cory


    I’m not sure I can accept the premise that a collapse wouldn’t have occured without Freddie and Fannie. Don’t you think they were two pieces in the house of cards? Credit, derivitives, stock manipulation, a consumption and growth based paradigm, globalization, decline of organized labor, etc etc?

  • Ann

    I AGREE with Cory and DISAGREE with JP! Thanks, Cory: GREAT rebuttal & summary of the situation!

  • cory


    I loved your post. The sad thing is that capitalism and the free market combined with the world’s resources theoretically can provide plenty for everyone. You just can’t escape that the 5-20% at the top have throughout history grotesquely taken advantage of the bottom 80-95%.

    I like Social Democracy, but can’t escape the feeling that the folks at the top will never let it happen in a meaningful or effective way. I hold out hope that there will come a point when the 80% realize the power of their numbers and set things straight… Permanently!

  • Ann

    Oh! I forgot to say this: I LOVE & ADMIRE “THE ASCENT OF MONEY” TV series!! It is WONDERFUL!

  • MARK


  • http://www.filipinoboston.blogspot.com AKILEZ

    They ALL the same if you are talking the Financial world they’re all corrupt, manipulative,scammers and greed.


    Who wants to listen to the Financial world. A lot of people are broke and unemployed because they manipulated the market.

    Scammers because they let you sign a sub-prime mortgages not even them can understand.

    The Financial world will bet on their own investment to drive the market down.

    Corrupt – Bernard Madoff one great example.

    Greed – The financial world will do anything to make money even it will destroy the American economy.

  • ArtyB

    What goes up must come down. it is simple physics. Unless you have something to prop it up, it is bound to come down. American seems to be doing that using props to block the fall but those props are not fail proof and they can only go so far.

  • Angela

    Would Mr. Ferguson feel the U.S. could benefit from ‘turning inward’, so to speak, with regard to domestic growth, i.e., by long-term investments in its own companies – opposed to foreign? I realize that sounds protectionist, but one has to wonder if keeping our money here isn’t the answer…or at least part of it.

  • Andrew

    No jobs if there is no demand. No demand if there is no money in the hands of the people. You can cut my business taxes to 0, and if I can’t see anything because nobody has money, I’m in trouble, and no jobs are created.

  • Andrew

    Make that “sell” instead of “see.”

  • Decidedlydissident

    I think Krugman had a great point when he mentioned in his NY Times Op-ed
    “The key point is that while the advocates of austerity pose as hardheaded realists, doing what has to be done, they can’t and won’t justify their stance with actual numbers — because the numbers do not, in fact, support their position. Nor can they claim that markets are demanding austerity. On the contrary, the German government remains able to borrow at rock-bottom interest rates.

    So the real motivations for their obsession with austerity lie somewhere else.

    In America, many self-described deficit hawks are hypocrites, pure and simple: They’re eager to slash benefits for those in need, but their concerns about red ink vanish when it comes to tax breaks for the wealthy. Thus, Senator Ben Nelson, who sanctimoniously declared that we can’t afford $77 billion in aid to the unemployed, was instrumental in passing the first Bush tax cut, which cost a cool $1.3 trillion.”

    I think it’s just a case of the wealthy trying to selfishly hold one to whatever they can, trying to build a structure without a foundation. Taxes are the cost of living in society. Which will lower crime? Cutting police spending, education, and jail staff and allowing yourself an extra few zeroes in your account?

  • http://www.lawrenceamonteith.com Larry Monteith

    I agree that we need to have long term balanced budget. Keynes would agree. Politicians love to remember Keynes’s spending policies when the economy is in a downturn, but forget that he said governments should run a surplus during good economic times as a hedge against inflation. Everyone forgets that part. Republicans, who have suddenly started worrying about inflation under an Obama administration our mute when Bush ran up deficits for no good reason. Now, with a good reason to run deficits, we have claim to have no money.

    Imagine what would have happened if we would have continued the modestly balanced budgets at the end of the Clinton administration, and then hit some sort of bump in the economy. We could have a stimulus program that could really have a real effect on the economy, kind of like what China is doing.

  • worried for the country

    Loved the book, Ascent of Money.

    Can’t wait to hear Niall’s prognostications!

    Is history repeating itself?

  • Ellen Dibble

    I’d like to know whether Niall Ferguson has considered that it’s not the death of the American Empire but death of the fossil-fuel-based GDP that is taking place. Do we see our national wealth as measured by how many cars we buy, how energy-hungry (large) our houses, how many products (shipped with energy)? It seems to me we are questioning whether our profit should be from banks, medical insurers, kinds of energy that are commodities (oil, natural gas, nuclear — anything that isn’t in essence free from the planet). We say we want a new green economy, but though we complain about up-front costs, the problem is that the old engines of profit will all be viewed as immoral. Maybe even the military, if we yield to a more global foreign policy.

  • JP

    Freddie and Fannie, are responsible for creating the derivatives market for home mortgages where a bunch of mortgages are bundled and bought and sold without knowing the underlying value of the financial assets and the ability for the borrowers to pay. This change didn’t only affect low and middle income but also lots of high end properties that were purchased by people unable to afford them.

  • http://tombstone001.blogspot.com MOHAMMED N. RAZAVI

    One thing the people on the right are not told is that all the government spending on entitlements end up in the pockets of the middle class or rich (however you define that) , medicare payments go to the doctors, and the rent subsidies go to the landlords, food stamps are spent at the grocery store and increase profit for the owners, what we need is to raise taxes on those in whos pockets this money goes in to.

    The reason the stimulus did not work is that half the money went to stimulate the Chinese economy, as whatever you went out and bought was made in China, the rich do not create jobs, they lay off people to make more money.

  • Charles

    Hello, excellent show. Isn’t it true that the U.S. currency is the only game in town, and the only credible currency in which other countries can invest? The Chinese have discussed investing in other currencies, but this has not, I believe, happened. So given the lack of alternatives, does this protect the U.S. currency and standard of living?

  • Ellen Dibble

    I was interested to hear this morning that the United Kingdom’s plan to renew their fiscal stability includes redirection AWAY from manufacturing. I couldn’t believe my ears. It sounds like England wants to be a service/R&D economy. Did anyone else hear that?

  • Kevin Kirsch

    There is all this dissappointing news about social security. A simple solution is to raise the cap. There is a cap in the income level where deductions stop. It use to be 75K. Raise that. There are so many people that make more than that there would be a big increase in the fund.

    For the rest, get people back to work that will start growth and raise tax revenues then we can reduce the debt. Hopefully then we will be out of the war as well and can funnel even more funds into the debt and also have less drawing out loans.

  • Andrew

    What are the bond investors going to do with their money? Put in in a mattress? If people don’t want to lend us money, why not print it? The austerity is all about keeping the rich rich.

  • Mark

    1) In 2007, Mr. Ferguson was named an investment management consultant by GLG Partners. Does he have a financial stake in the opinions he is expressing today?

    2)In May 2009 he had a disagreement with Paul Krugman in which Mr. Ferguson criticized Pres. Obama’s economic policies and predicted a significant rise in interest rates as a result. That did not happen. I would like him to explain why he got it wrong.

  • Douglas

    How about restructure social security. Give everyone their own account. No crash in history has made interest rates go negative. The rates can fluctuate with inflation to offset actual dollar amount.

    Simple. I pay into social security, I get money back when I retire. Period!

  • http://carcpa@gmail.com Chuck

    What about the Value Added Tax, could that help with the recovery and the inequities in our tax system?

  • John

    WBUR stop interrupting On Point! It is great that you are trying to reduce pledge drives to two days but I’d rather a week or two of brief announcements at every regularly scheduled break requesting a pledge instead of this constant blather that we are subjected to each pledge drive.

  • john smith

    give me a break. this dude simply makes conclusionary comments but never is forced to back them up with evidence. for instance, that laissez faire econ would produce more jobs, etc. look at the last several decades of US economic policy and the resulting loss of real jobs with a real wage and the loss of real income for those who didn’t end up unemployed.

    and, as for his comment that it is self-evident that a person would be better off with a job than receiving public benefits, well, first, there are no jobs to be had and no reason to believe that his prescription would create jobs; after all it never has in the past and the history of the last several decades of laissez-faire econ is lower and lower paying jobs and the loss of realitively well paying manufacturing jobs. but, more directly, would you be better off making $5/hour (don’t forget that fergie opposes the minimum wage laws), no benefits, including no health insurance, no unemployment benefits, no sick pay, etc, etc or with welfare, medicaid, housing assistance and financial assistance for your kids education?

    the choices are stark but fergie is the one who posed the question.

  • http://spettinger@yahoo.com Sonia Ettinger

    Niall Ferguson mentions the entitlement programs but what about the costs of the wars? These show no sign of abating – but are costing money and lives- including the lives of the damaged men who are returning with permanent injuries.

    Perhaps another topic is why is this country esp Michigan not building esp trains!!

  • Tom Hardin

    Q: I read recently that some $1 trillion is sitting on the side lines that large companies and investors are holding. What will encourage them to trust enough to spend/invest some of that money as it appears that is the stimulus we need? What policy does Ferguson and or Krugman recommend to make them jump in the game?

  • BHA

    I propose we adopt a graduated tax with no deductions for anyone or any thing. Those who make less money pay less tax. Those who make a lot of money have no hole to hide it in. One page tax form used by all. Those who have extenuating circumstances prove their case to the IRS for a ‘hardship’ refund.

    We should not be overly concerned with the people whose after tax income is 10, 50, 100 times that of the poor and middle class. If people can scrape together a life on $20K, $50K, $100K a year, it shouldn’t be too hard to do it on $200,000; $2,500,000; $10,000,000 a year.

  • jeffe

    Freddie and Fannie, are responsible for creating the derivatives market for home mortgages where a bunch of mortgages are bundled and bought and sold without knowing the underlying value of the financial assets and the ability for the borrowers to pay. This change didn’t only affect low and middle income but also lots of high end properties that were purchased by people unable to afford them.
    Posted by JP
    This wrong, period. They did not create derivatives, these were created by wall street.

  • Ellen Dibble

    Definitely re-design Social Security and Medicare for the 21st century, but what about all the army bases we maintain overseas? Is that due to oil gluttony? Can’t we make the United Nations the global peacekeeper at last? (Sorry, huge issue there, but still. Maybe NATO?)

  • John

    Niall Ferguson is a Hard Money advocate which is heavily influenced by ‘gold standard’ thinking. We are not on the gold standard. We have a fiat currency. Check out Warren Mosler, Randall Fray, MMT. Sovereign non convertible currencies can not have a solvency problem. they can have inflation and deflation…but never a solvency problem.

  • JP


    VAT tax is one of the most regressive and opaque tax systems out there since it taxes low income people at the same rate as millionaires. It also has to problem that it taxes products several times during the production of the good. Some goods will have been taxed 5 times before it reaches the store.

  • Tom Berke

    Prof. Ferguson is right on the money on U.S. financial crisis. The Federal Government is infact running the biggiest ponzi scheme there is, paying debt with newley borrowed money…
    Look, U.S. gross debt FY-09 was $11.9 trillion. This amount roughly equals to U.S. GDP.
    2015 general revenues will be insufficient to pay current S.S. benefits.
    Growth in the debt will sharply raise the Gov.’s interest payments from 1.3% of GDP this yr to 3.5% in 2020, 4.5% by 2030, an 10% by 2050.
    When external debt reaches 60% of GDP, annual growth declines by 2%.
    Prof. Ferguson is correct to say that in order to pay this enoumous debt U.S. needs to raise taxes. Taxes would have to be rise by ~1/3rd to pay all the promises that have been made for just S.S. and Medicare deficit.

  • Bill Engel

    I would like to point out that the SSI tax went up in 1983 to support Social Security into 2035 or so.
    The Congress has been unwilling to keep the “lock box” locked. Why is this robbery not pointed out as fraud by the federal government by your guest? They took this money as a line item on our check stubs as SSI and gave it out as taxes collected and to mask the deficit. If the government can’t pay this back to Social Security then isn’t that a default on a loan?


  • Ellen Dibble

    BHA, what about businesses, Schedule C? If I’m starting a business or expanding I deal with an IRS agent about postponing taxes instead of the banks for a loan?

  • Brian

    I’m tired of economists talking about a generic “economy”. Some parts of the economy NEED to fail because they’re unsustainable. Excess consumer consumption creates a hair trigger business cycle whereas investing in sustainable infrastructure would cycle money back into the economy. Green energy, community institutions, micro lending for small business all make us safer and more confident in the future.

  • Bruce

    Cut taxes, cut welfare…bla, bla, bla. How about us poor people just send all our money to Warren Buffet, skip the middle man,and say a pray to Lord Reagan. We’ve heard this right wing crap for years and the rich won’t be happy until they’ve got it all and us poor are are all in the army fighting their wars for resources.

  • Ellen Dibble

    Banks are definitely shooting our recovery in the foot. Take someone who is expanding, has a backload of orders requiring everyone work 24/7 and new supplies, and the lender says, hey, you owe more this month than last. Your interest rate is going from 4.99% to 29.9%. Goodbye 100s of jobs. Goodbye that business. Goodbye viable loan. Hello bankruptcy.

  • JP

    No matter what is done entitlements must be cut starting with a full repeal of the Obama Health care plan!

  • JP

    Ellen Dibble,

    Are you financing a business on a credit card? Your example makes no sense for any well run company!

  • JP

    Reducing corporate taxes would make American made goods more affordable for the US population as well as others around the world. If you drop corporate taxes to 15% we will finally stop outsourcing and get the trend reversed.

  • BHA

    “WBUR stop interrupting On Point! …..”

    John (and others)
    When VPR was having it’s pledge drive, I found the WBUR website and listened there. VPR is not doing a drive now:

  • jeffe

    One thing I am not hearing mentioned is how the banks are not lending to businesses. I saw an interview last night on PBS with a company in Missouri that has the orders and is trying to expand but the can’t get the capital to order parts to meat the demand. This is systemic all across the country and part of the blame does land at the feet of the government but the bulk is laid at the feet of the very institutions that caused this mess.

    We need job growth which is the only way we are going to be able to pay down the debt. We will have to raise taxes as well to some extent.

  • Gustavo

    First of all Niall Ferguson is an excellent conversationalist, but as much as he desires the comparison, he does not have the intellect to be continually mentioned in the same breath as Professor Krugman.

    Secondly, Niall continues to push the PIGS as a comparison to the U.S. How about Germany or Canada which have a higher Debt to GDP ratio? If you must stick to the PIGS then focus also on Ireland that followed Niall’s misguided austerity prescriptions….only to pay more on their debt than Spain which has resisted austerity measures.

    Finally, why did you not invite A Bob Reich, Dean Baker, Mark Thoma or even the great Financial Times columnist Martin Wolf to at least slow down Nialls’s unstoppable verbosity?

  • Michael

    Niall Ferguson, bottomline is your be on welfare if you don’t follow his advice, sad Paul K. could not be on. Give tax cuts to the rich and cut corp taxes, cut funding for the poor and middleclass, and puff all our problems is somehow solved and the defict is solved. How about we cut taxes on the rich to Zero and Corp taxes to zero on the remaining 33% of companies that actually have tax burdens, I such this will help the U.S.(not)

    “Hoover Institution” speaks volumes of this guy, and his voodoo economics.

  • Ellen Dibble

    JP, I’m going off a story on the NewsHour on PBS last night with Paul Solman (sp?). A business rebuilding parts for vehicles. Many are repairing. The banks aren’t helping their growth.

  • Philip

    Has your guest seen Michael Ruppert’s movie Collapse? What are his comments about Mr. Ruppert assessment of our society and financial situation?

  • Tim Martin

    Is it taboo to even mention the 1.1Trillion we spend on military and other ‘security’ boondoggles?
    also – Is it not trwu that banks are being encouraged to lend by White House and Fed but at the same time they are being held to higher reserve requirements by other bank regulators?

  • Elizabeth

    Mr. Ferguson, Where is demand going to come from to stimulate small businesses when consumers can’t borrow against their homes anymore and have to pay off all their accumulated debt?

  • Stav

    Thanks to Mohammed above for pointing out the truth about American fiscal policy: it is all about subsidizing the Very Wealthy and the Middle Class. Who gets the short end of the stick…the Poor and, even though they have enough to live very enjoyable lives, the Upper Middle Class.

  • http://starvisions.blogspot.com/ Tim Donovan

    Ferguson and others may be right. Scaling back Medicare and other expensive programs, and a federal sales tax etc may forestall economic disaster and put us on the path to fiscal stability. Unfortunately, this is futile talk. The problem is not a lack of solutions but a lack of POWER to implement them. In other words, the crux of the problem is DEMOCRACY. Real solutions require SACRIFICE and that is no way to win an election. Try to get elected by cutting popular social programs or raising taxes. If real solutions were possible in our democracy, the deficit problem would’ve been solved long ago. The most likely scenario, by far, is an eventual economic disaster. But it will NOT destroy the US or its power. It will only destroy the democracy which is at the heart of the problem, and others (note how only an authoritarian state like China can have a 1 child policy to combat overpopulation). We are NOT at a stage of history similar to the fall of the Roman EMPIRE, but the Roman REPUBLIC. Once US (etc) democracy is overwhelmed by crises, we’ll recover and then some. Only authoritarian government can effectively tackle the problems. It is noteworthy that the advent of Roman Caesarism led to the peak of Roman civilization and power (27 BCE-180 CE).

  • JP

    Banks won’t lend until they see an end to the war on corporate profits since that is what is used to pay them back on the loans given. The looming increase in interest rates is also making banks hold back until rates go up so they don’t loose money on the deal.

    Some banks are still building cash reserves to build their balance sheets to offset the home loan losses expected

  • john smith


    thanks for reminding us that there are real economists out there, like dean baker, who don’t just regurgitate the same old worn out unproved “lets use anything & everything as an excuse to take from working people and give it to the rich”, espically when many, many of them are responsible for the economic situation the US is facing.

  • Ellen Dibble

    JP, I’m also going on a credit report that shows everyplace I have purchased something on a credit card but nowhere shows the credit cards I have paid off. At the height of the crisis, in fall 2008, the banks were shedding credit as if their money were toxic for them to hold, and there were ways you could use their “extra” money in a checking account (moving money into Roth IRAs, for instance, paying taxes ahead). Somehow credit rating agencies didn’t count that, and essentially you were borrowing against yourself by using your checking account.
    The health and prospects of a business doesn’t always show up in the computers that try to track these things. One of the managers at business shown on NewsHour said that the only banks look at is cash flow. I’m thinking, right, at present about a third of my annual income is pending. Certain people are on vacation or something. In the past decade, banks were much more than glad to lend me money for 6 months, a year, ad infinitum, the longer the better, so after a few decades of smooth sailing, you didn’t have to worry too much. If a client says, “Can I wait to pay you? I’m repairing my pool,” I’d say no problem. Now I go after my life insurance or retirement funds, which I used to do in the 1990s. In any case, it’s too bad when someone can’t start their own business until they are about 50 and have their own resources to use as bank of last resort. That was my own experience, and I’d say, young people, save. Some day you may be working for yourself.

  • Ellen Dibble

    According to Paul Solman (sp), one reason banks are holding back reserves is that the government (Federal Reserve?) needs to demand they do that in order to keep inflation down.
    How come I remember that? It makes no sense to me.

  • Stav

    But if one hand praises Mohammed above, the other must take exception to his comment on the efficacy of the Stimulus. The Stimulus did what it was supposed to do, it stopped a horrible plunge in confidence and spending. since about a third of the Stimulus was tax cuts and another third was payments to the states, most of the money stayes in the U.S. not China.

    However, states did create an anti-stimulus by severely contracting their spending and using the U.S. dollars to make up for most of the reduction. Doesn’t stimulate to cut state jobs and spending and to pocket what the Feds give you.


    One good Example of Manipulative,Greed,Corrupt and Scams

    A lot of people are complaining about Over Draft Fees.

    For Example:

    A consumer has a $50.00 checking account balance.
    The consumer bought a $51.50 product. The bank will charge that consumer about $39.00 for overdraft fee.
    for $-1.50 balance on the consumer’s checking account.

    Some people sometimes are too busy to check on their account balance even though they can balance a check book. The Problem is what if the person doesn’t have the $1.50

    Yes $39.00 for a fee for a $-1.50 checking balance.
    The Weirdest part is that the Federal government passed regulation about overdraft fees. But this Federal regulation does not AFFECT THE BIG BANKS it will Affects the Credit Union or Small Banks.

    THE BIG BANKS WILL continue to charge BIG fees on overdraft while the Smaller banks cannnot charge over draft fees.

    Credit Union or Small Banks DO NOT actually charge over draft fees to their customer IT IS THE BIG BANKS LIKE Bank Of America, Citizen’s Bank, etc etc are the one who need to stop those overdraft fees.

    I hate the Financial world

  • BHA

    Ellen -
    Were I to start a company, I would hope that I would create a business plan that included the cost of money in the profit/loss calculation. Only the rich can afford to start a company that loses money from day one.

    I see this no differently than buying a house. When I bought my first house I did NOT include the mortgage interest deduction in the calculation of how ‘much’ house I could afford. That was 28 years ago. When I moved 22 years ago into my current house, I did the same thing. What does that mean? It means my family of 4 lives in a perfectly adequate 1,550 sq ft house instead of a 3,000 sq ft house. Lower utility bills, lower taxes and I paid off the mortgage 8 years ago. All of the deductible interest I did NOT pay is money I can spend on other things. I know that you are money savvy but in case there are readers who are not – the deduction is at your marginal rate, not 100%. If your marginal rate is 20%, and you pay $300K in interest over the life of the loan, you only ‘get back’ $60K of it. The other nearly QUARTER MILLION DOLLARS goes to the bank.

    Does $300K in interest sound like a lot? That is what it would be on a 7% 30 year loan for a $215K loan. The average 2009 selling price of a house in the US was about $270K.

  • ThresherK

    I’m tired of economists talking about a generic “economy”.

    Brian, a riddle:

    What’s the last thing a Chicago school economist says before drowning crossing a stream?

    “Don’t worry! It averages a foot deep!”

    PS Thanks to our host for bringing Paul Krugman’s ideas into the discussion.

  • Ellen Dibble

    The mortgage deduction on your taxes is an ENORMOUS give-away to the banks, who can honestly say that interest on home mortgage loans is deductible. They don’t know your marginal rate so they don’t tell you. But I think a huge part of the insistence that the American Way of life is home ownership is related to this huge perk to local banks (when local banks were doing this).
    People posting that the banks are holding back credit because of the housing foreclosures (bank losses) coming down the pike, and also that therefore people with loans are being charged more in fees, way more in interest — gee, whiz, I get to pay for the mistakes made by the banks, the mistakes made by people miscalculating the cost of homeownership?
    It does sound like those follies on the part of both rich (banks) and non-rich are going to be plaguing us for a long time. It seems to be a drag on our recovery, that’s for sure.
    BHA, if my business is anything like the norm, there is hardly a course to be charted. It’s not like an employment with a pay rate. For instance, my local competition went the way of the dinosaurs when a certain spouse hanged himself, and I suppose there were insurance payouts. Anyway. And then there was other not so much competition as efforts to muscle one out of the way, buy one out and so on. The more you are muscled (plagued, Sicilian style or otherwise) the more you are perceived as a threat. Tell that to the banks.

  • BHA

    Ellen: “and the lender says, hey, you owe more this month than last. Your interest rate is going from 4.99% to 29.9%. ”

    Sounds like it is time to get a loan from the local bank instead of the behemoth across the country :)

    Any decent ‘shirtsleeves’ banker who personally knows their customer and the business they are financing can tell the difference between low risk expansion and a company that is at risk simply because they owe more money this month than last month.

    A well run and growing business pays their bills at the end of the month even though they may be borrowing ‘new’ money every month for the supplies needed to make the next ‘n’ products to sell. If you can show your sales are increasing at least as fast as the costs, the banker will not be hiking your rates.

  • Ellen Dibble

    BHA, my local bank is Bank of America. If I had a car, I would have easier access to the community banks. To tell the truth, I wouldn’t loan myself money if I were a bank. I am cutting across the grain in the technologies I use, and my health isn’t anything to bank on. So I like the anonymity of the big institutions. Right now I will absolutely be fine. If I were younger and healthier I would be doing more than chugging along happily.
    I have plenty of good offers from Citi Bank and Chase and others if I wanted cash, mostly short-term. I do call to confirm the mailing info and they tell me: Oh, good payer for 20 years; how can we help.
    But most of their mailings (and the default loan rate) are geared to the people they want to fleece as well as the people they want to nurture. I just think it is counterproductive to make it SO DIFFICULT to get a fair deal. Not for me, but as you say, I’m savvy.

  • cory


    You wrote “If you drop corporate taxes to 15% we will finally stop outsourcing and get the trend reversed.”

    Do you really believe that this will stop outsourcing to China and India? This simple tax change will level the playing field and actually reverse the trend? Jobs will begin coming from China and India to the U.S. simply by cutting the corporate tax rate to 15%?

    Just want to be sure.

  • Roland G. Adams

    Niall Ferguson has a strong argument. History supports his ideas. The economic situation in Britain during and after WW2 has been well documented by Correlli Barnet in “Audit of War” and “The Lost Victory”. The parallels between post WW2 Britain and USA today are striking eg:

    Recent, large net flow of funds from Britain to USA
    Recent, large net flow of funds from USA to China

    Rescue and re-organisation of car industry – BMC
    Rescue and re-organisation of car industry – GM

    One fuel dominating energy supply – coal
    One fuel dominating energy supply – oil

    Large military overseas
    Large military overseas

    Introduction of free health care for all
    Introduction of free health care for all

  • JP

    Ellen Dibble,

    Some people would say what I have been doing for the last 10 years is work, but I love it and you must see that in my text since I wouldn’t call it work. My business has no problem borrowing money when needed, but I paid off 1/2 of the debt during the downturn in order to protect against the beginning of the upward trend in interest rates. Business these days are better off not borrowing money for any long period of time and should be in the middle of a plan to go debt free like I have done. Interest rates will bankrupt my competition since they have so much revolving debt. The competition like the US government will be forced to spend more and more money to service their debt while I don’t have that expense.

  • Greg

    Return to growth; Japan has been at 0% growth for decades; etc., etc., etc.

    Aside from the expansion of the universe as a whole, can anything grow forever? This sounds like the biggest Ponzi scheme of all time – an entire civilization buying into yet another fairy tale. Perhaps we are approaching the event horizon of capitalism; it may be a heck of a ride.

  • JP


    It will help a lot since it makes outsourcing more expensive relative to domestic production. Outsourcing always has negative aspects to businesses (quality, turn time, unreliable shipping times)but the cost difference has been big enough to outweigh the detriments.

  • Ellen Dibble

    GP20 coming up this week I think. Obama is trying to get the Chinese to float the value of their currency, as I understand it, so that Chinese goods are not so cheap, not so competitive with American goods. In effect, Chinese labor will be paid more because they will be paid in a currency that buys more American goods, if they so chose. So China’s currency policy (which is being addressed at the very top right now) could affect whether it makes sense to corporations to outsource labor or keep it at home.
    It would take a lot of currency manipulation to make all the jobs come home. But…

  • Bob


    We are at the event horizon, but not of capitalism, rather capitalism undermined by socialism!

  • Ellen Dibble

    JP, I think the USA should adopt your plan to pay down the debt by 50% this year and continue on this path so as to out-compete Europe et al in their decline.
    Am I joking? No. But I think the Republicans would have to develop a new theme song, not the one about future growth paying for current debt. I definitely think that future growth, using the profit and tax-generating methods currently in place (fossil-fuel-type, in vehicles and housing, chiefly) will cook the planet. In order to control the habitability of the planet, we have to aim for contraction. And if that makes it more difficult to pay down the national debt, so be it. Ditto on a personal scale, it can cost now (paying down debt, buying more efficient technologies) to make the future more sustainable.

  • JP

    Ellen Dibble,

    You are right about the Chinese currency!

  • BHA

    Ellen: “But I think the Republicans would have to develop a new theme song, not the one about future growth paying for current debt. ”

    Sounds a lot like the speculative housing ‘investment’ plan that helped take down the economies of every industrialized country on the planet. Borrow 100% now, the house will rapidly increase in value; sell for a quick fat profit. Oops

  • Betram

    A small question, whatever happened to bankers that safeguarded assets. Poor loan decisions created all of this. Everything else happened because of this proximate cause.

  • Susan

    I hear Mr Ferguson calling for reducing taxes. That’s in part what contributed to this situation. We were promised that the tax cut would cause business to create more jobs and yet the savings seem to have gone to bonuses, dividends and to contribute to our huge wage discrepancies. I simply do not believe that corporations will do anything different.

  • Eric M.


    This is a great interview and very much “on point.”

    I’m 33, just starting my family and I can tell you that I have been telling my family that there will be a emigration from the USA of my generation and younger generations for opportunities. I’m already looking…whether for a country to retire or to raise my family.

    Our political policies for decades, both parties are driving us into the ground.

    Too many entitlements and an under appreciation for the future is what is ahead. and yes… The parallels with Europe, Greece,etc are too poignant to continue to ignore.


    Columbus, OH

  • Sam Wilson

    “If you drop corporate taxes to 15% we will finally stop outsourcing and get the trend reversed.”

    So, a Chinese factory worker on 200 USD per month, or an Indian IT worker 1000 USD per month will prove less competitive against a 15% corporate tax rate? Seriously are you sure?

  • Andy Bogle

    SS is very easily fixed – raise the retirement age, let the tax cuts for the wealthy expire, raise the salary cap, and implement Al Gore’s lock box preventing raids on the fund.

    People such as myself have been paying in to the system for our working lives and expect to get our benefits. You ignore that this is a pay in to system.

    Niall is falling into the trap of accepting the worst case scenarios of the anti SS crowd that ignore the pay in, experts saying the solvency runs to 2037 to as late as 2050. Getting the economy back on track and people back to work also helps fix the problem

    Also on corporate taxes – despite the high rates, corps pay very little due to armies of accountants and lawyers as well as offshore havens effectively shifting the burden off onto middle class


    Raise the retirement age?
    I will NOT work until I die. my life is not about paying taxes. Why on earth do we have to do that especially in America.

    I want to retire by the age 65 and then spend the remainder of my life enjoying life or take care of grand children(s) not pay taxes so Politicians can use my money for A war or use my money to buy them mink coats.

    If this is life in America no thank you.

  • cory

    If my choices are a general collapse or putting my faith and cash into big money and big business, and dismantling entitlements…

    I’ll take my chances with collapse.

    Big money and business have had since 1980 to prove their case and I’ve seen all I need to. Maybe what is born from this “collapse” will make a little more sense.

  • paul

    Keynesian economics is purely and simply, the belief that government knows how to spend our money better than we do. There’s no way to get around that fundamental premise.

  • paul

    You want a REAL American economic renaissance?

    Fair Tax. H.R.25 / S 296

  • Alex

    “raise the retirement age”

    right. that’s why I don’t invest in retirement accounts. The government may easily change the rules on you even with respect to privately held 401Ks or IRAs. As they say in the former Soviet Union: “never gamble with the Government.”

  • Christopher Wyatt

    Does Niall see the Fair Tax as being a viable alternative?
    I do not hear people addressing this often and would love to hear what he has to say about it.

  • Jonathan

    Two points:
    1) How can we continue as a country to be so self-serving and short-sighted? We are so financially near-sighted that we can’t see the fiscal train wreck headed our way? We are so intent on the immediate future that we can’t learn from history? It reminds of the definition of insanity: doing the same things over and over expecting different results.

    2) What is going to do more social/financial good: saving one ‘middle class’ job of $300,000 per year or ten jobs at $30,000 per year? $30k is more the norm around here. And, at 15% unemployment, we could use it. We don’t need to save big business. We need average Joe business.

  • J Hull

    As I listen, I am wondering about how the high salaries at some levels of the corporate world affect the low employment rate. Would companies be better able to hire more workers at every level if the higher salaries were lower?? I do understand that these high salaries are important in keeping businesses competitive.

  • Pete

    I find it funny how Mr. Ferguson doesn’t acknowledge that the high tax rates in the 40′s-50′s and 60′s on high earners is what CREATED the middle class.

  • http://www.witsendnj.blogspot.com Gail Zawacki

    Please ask Dr. Ferguson my question, I really want to know!!

    Why do economists feel free to discuss growth and debt without factoring in the critical role of the physical environment? Human society cannot exist, yet alone “grow” without a functional ecosystem from which to extract the food and other commodities upon which it relies.

    Given that the ecosystem is collapsing from the pollution we have been tossing into the atmosphere, on the land and in the sea, WHY do economists make prediction without including the deficit we have build up in the physical world?

    By way of example, the oceans are acidifying faster than they have for 800,000 years. There is no way that shellfish, coral, the the pteropods as to bottom of the food chain can adapt in time – they are simply going to dissolve.

    Does Dr. Ferguson include the complete loss of food from the ocean in the economic analysis and if not, why not?

    Thank you,

    Gail Zawacki

  • http://www.witsendnj.blogspot.com Gail Zawacki

    Oh and I forgot to mention, Ronald Reagan was the WORST president ever. The first thing he did was remove the solar panels from the roof of the White House (installed by Jimmy Carter, declared “Mourning in America”, led the country on a decades-long binge that has ended so far in furthering our dependance on foreign fossil fuels, a government of the corporation, by the corporation, and for the corporation, a Gulf that may never recover, and ozone levels so toxic they are killing trees and crops.

    Way to go, Ronnie!

  • BrettG

    Prof. Ferguson loses credibility today. He suggests that we should encourage businesses to hire. However, how does he intend to increase demand for goods & services if workers/customers/voters have no $$ to spend?

    How does he expect to raise business confidence if the businesses have no customers ringing their phone off the hook? How many new factories have been built without the demand created by the company’s customers.

    His interpretation as well as the first caller from Cambridge MA are B.S.

    This current crisis was brought about by the effects of 30 years of “de-regulation” & NON-regulation of business, especially finance, real estate (S&L Crisis/Resolution Trust Corporation that paid off Bush investments and other crooks, etc.

    Also, his comparisons to EU problems don’t distinguish the differences in their economic problems.

    Prof. Ferguson is always interesting to hear. However, in our present situation, the White House advisors should be Dean Baker, Simon Johnson, Paul Krugman, Jeff Madrick.

    Prof. Ferguson writes interesting histories, but his Rx for today is divorced from the reality of those who have been laid off & who will be laid off in the next year, or so, or?

    Thank you kindly for a fun show!

  • David

    My question is this. Isn’t what Naill Ferguson is presenting here is Reaganomics. It is nice to hear him talk about the importance of small business… but, even under Ronald Reagan’s economic policies this issue was never fully addressed small business issues. And I would add that Reaganomics actually squandered the benefits of America’s Cold War survival. I think that he is merely re-presenting Reaganomics in another guise. The key element concerning Keynes, that I like, was the importance of maintaining a large middle class, not laissez-faire, that I think that Ferguson is actually presenting.. but, Keynes comes closer to maintianig a large and expanding middle class. Also, the idea he presents about the importance of corporate CEO positions has most certainly been proven to be inadequate in our recent history… like the last three years. Corporate tax reduction has not worked… Reaganomics, again. As a matter of fact it seems to have only encouraged gross social irresponsibility… Enron, BP (is this British Government owned?), AIG? Hello! I really want to hear more about Capitalism… not Laissez-Faire.. which it seems, to me, what Ferguson tips towards in fact. Thanks, again, for the bone for small business, sir. But, your standing up for corporate CEOs makes me question your sincerity for small business development. Also, perhaps, Ferguson’s perspective, given the majority of of the histories he has studied may have narrowed his view towards an inherently autocratic laissez-faire perspective as opposed to a Capitialist perspective. I havn’t read his books… but, these are the questions I ask. Is he a Tory? Economicly one should never be complacent… but, perhaps too many of his points represent a Reaganomics complacency. Trickle down theory and corporate welfare. Be that as it may, I think that if all contracts had been appropriately transparent we would probably not be in the pickle we are in now.

  • BrettG

    Prof. Ferguson blows the lecture.

    He doesn’t distinguish between Statutory Corporate Tax Rates & the Effective Rate that corporation ACTUALLY PAY?!

    Look @ the IRS take from major corporations & the effective Corporate Tax Rate is only slightly higher than Hong Kong. After credits from FED, STATE, LOCAL, then shrinking the profits by executive bonuses & perks, etc., the large corporations get off easy. Then there are those credits that encourage companies to move jobs off-shore -thereby depriving FED, State, Local governments of payroll taxes, income taxes, sales taxes from local sales to the companies’ employees, business visitors, etc.

    Please Prof. Ferguson, Reaganomic “Supply-Side,” Soviet-style managed economies don’t work. See USSR, US debt & deficit increases during Reagan, Bush 41 & Bush 43 vs. jobs produced.

    Then compare that to the US postwar tax structure and the 40 years of a large & well-employed Middle Class that had limits, but also had affordable steps for most residents.

    Now, who’s more productive and have a better chance of moving people from lower to higher income? France, Denmark, Germany, Finland, Norway, Sweden!

    No more Corporate Welfare Queens.

  • http://www.witsendnj.blogspot.com Gail Zawacki

    “Less than 4% growth is unacceptable in the US”???

    What a fantasy – as though we will have any choice as to what to accept or reject?

    Hahaha. Wait for the rising seas, the intolerable fatal temperature rises – tell that to the victims of floods in New England, in Arkansas, in Tennessee!

  • Chris

    How do we know that this is a problem with democracy? We all want our entitlements, we all want to be fair but does it work?

  • Ellen Dibble

    BrettG, what explains the way Americans voted — for Reagan, for George W — twice? The reason for such choice seems a cross between Joe the Plumber, voting for the dream of making $300,000 a year and not having appreciably higher taxes, and Sarah Palin, with the gospel of clean living and family values. Umm. Religion, I mean, and its ability to congeal a voting plurality with a modicum of advertising. Basically, dirty energy and clean snouts, whatever I mean by that. Or costly plumbing and hygiene plus as many certainties as one can surround oneself with.
    It’s not to do with reality, our way of voting. Reality, that’s what you find on reality TV. Don’t you know. (How we actually got ourselves a president like Obama I don’t know. But is he the real deal? I think we’ll know in a decade.)

  • Ralph

    As someone once said – “Everybody loves a freebee”.
    A plurality of the public thinks that someone else will pay – the government, the rich, corporations, China, immigrants. Look at Greece, or Spain, or Venezuela, or Cuba or Zimbabwe. The situation can get worse and it will and fast if we think we can borrow or try to print money our way out of this. All the rest is just wishful thinking.

  • OldQuote

    Many years ago I tried to borrow my way out of debt, an before I could get it paid off, another crisis, more borrowing, another crisis, more borrowing, and well, after the 80′s 90′s, I was done.
    Today I see the Feds doing the same.
    I’ll bet it works out to the same.

  • Todd

    “Keynesian economics is purely and simply, the belief that government knows how to spend our money better than we do. There’s no way to get around that fundamental premise.”
    Posted by paul

    Agreed—best post of the day!

  • http://tombstone001.blogspot.com MOHAMMED N. RAZAVI

    Jobs will continue to be outsourced as long as there is someone who will work for less. Our own Southern states have seduced car companies to bring their plants down South with tax abatement, non union workers and low wages. Ca n you not see that the rich always pit the poor against their own? If you are hungry and take less money you will get the job, every time, globalization also means universally lower wages and higher productivity, with fewer benefits, in the old days we called it slavery.

  • Michael Griffin


    I listen to your show frequently and admire your ability to engage your guests with subtlety and insight. But I have to tell you, I think this program was hugely unfair to Paul Krugman.

    Ferguson repeatedly characterized Krugman’s views innacurately and in ways calculated to make his arguments more palatable. In effect, Krugman was reduced to a series of straw men. For you to permit that, when Krugman was not able to be there and speak for himself, really requires On Point to give Krugman equal time.

    At the top of this page you wrote, “He dukes it out with Paul Krugman.” Ha! So when will we hear Krugman’s version of Krugman’s views in a solo responding visit to On Point?

  • amy

    I haven’t heard ANYONE tell Mr. Ferguson that CUTTING TAXES ON CORPORATIONS HASN’T WORKED. He thinks this will boost business confidence and get them hiring again. Well, we tried that in spades under the Bush administration and what did it get us? THE WORST ECONOMIC CRISIS SINCE THE DEPRESSION. He is obviously selling the same old tired and worthless idea that cutting taxes and spending is the way to go. How predictably Republican of him. If we cut taxes on corporations, how are we supposed to reduce the deficit? By cutting programs that help the middle class. That is just cruel, and it DOESN’T EVEN WORK.

  • amy

    To BRETT G:


    Thank you for bringing up the blindingly bright and obvious contradiction in Republican thinking. Lowering taxes and inflating deficits has not produced jobs. And how can Republicans preach about deficits when THEY ARE RESPONSIBLE FOR THEM. I can’t explain here in polite language how much this angers me.

    Anyway thanks for your post.

  • amy

    One more thing. I live in France. The recession didn’t hit as hard here because of government regulation and what we in the US love to call entitlement programs. Those programs benefit everyone here. They are what you are due as a tax paying citizen and they keep the economy afloat in hard times because people have cash to spend. Yes, debt and deficits are a problem here like in any industrialized country. But the US and its culture of debt and deregulation is in a FAR worse situation now.

  • twenty-niner

    “Well, we tried that in spades under the Bush administration and what did it get us? THE WORST ECONOMIC CRISIS SINCE THE DEPRESSION.”

    The economic crisis is a result of over-leveraging in the housing market caused by loose lending standards, which in turn frothed up the market, which created demand for even more exotic lending instruments, which in turn gave buyers the cash to further propel housing to an unsustainable level, otherwise known as a virtuous cycle.

    The big banks, mortgage insurers, along with Fannie, Freddie, and ratings agencies greased the whole process by packaging mortgages into tranches, slapping on AAA ratings and peddling them to investors around the world. Ultimately, a huge portion of home owners were significantly over-levered and couldn’t service their loans. As the true risk of these bonds came to light, initially exposed by the CDS market, their values started to plummet. This, coupled with huge CDS payouts, ruined the balance sheets of many large institutions, which in turn froze the credit markets because no one knew who was solvent. Further, the balance sheets of homeowners were also stressed as home values receded to more realistic levels. The double blow of tightening credit and falling asset values plunged the country and much of the world into recession.

    As you can see, the recession has very little to do with Bush and taxes, not that I am a fan of Bush. It’s really the aftermath of a monstrous asset bubble. For a while, a huge swath of people were making a lot of money through the ownership and sale of real estate, and all of its related activity, and another huge swath wanted to join the party.

    Economists from the Austrian school would argue that a responsibility of government and moreover, a central bank is to prevent these kinds of bubbles in the first place, as they never seem to end well. The problem with bubbles is that times are generally very good right around the peak, so there’s little political will to pull the plug. For example, unemployment under Clinton dipped to roughly 4% in 2000, the year that the Nasdaq crashed (with the DOW following in 2001), and unemployment under Bush dipped to 4.6% in 2006-2007, the peak of the real estate bubble.

    In terms of taxation playing a role in all of this, the mortgage deduction is probably the biggest culprit, as it tends to stimulate home ownership, excessively in my opinion.

    What Mr. Ferguson is arguing (and I’ll state up front that I am a fan of his) is that excess borrowing can have catastrophic consequences because credit markets can start to move adversely faster than corrective measures can take hold, as was we saw here in the US in the fall of 2008 and recently in Europe, and by no means is the Europe crisis close be being resolved. In other words, if we wait until the bond markets tell us to correct course, it may be too late.

  • Erik

    These statements need corrections:

    “VAT tax is one of the most regressive and opaque tax systems… It also has to problem that it taxes products several times during the production of the good.” – JP

    If we are going to tax consumption (and that train has left the station), it is either going to be regressive or unworkable. And VAT does not “tax products several times”: each business along the way recovers the VAT on the things they buy. (wikipedia.org/wiki/VAT)

    “I’m tired of economists talking about a generic ‘economy’. Some parts of the economy NEED to fail because they’re unsustainable.” – Brian

    Niall Ferguson is a historian. He also thinks unsustainable parts of the economy should fail.

    “We are at the event horizon, but not of capitalism, rather capitalism undermined by socialism!” – Bob

    How about the event horizon of capitalism undermined by regulatory capture, social programs in exactly the kind of imbalance you would expect given the political and demographic realities, and sovereign competitors with different legacy costs?

  • Erik

    I get the impression a lot of people are simply not hearing what Ferguson is saying. Is it because it’s so much fun calling him a Reaganite supply-sider that they want everything he says to fit that mold?

    I do not hear Ferguson dogmatically advocating lower taxes across the board, but maybe I missed something. It sounds like he is for efficient tax systems, where we can hope to bring revenue in line with spending, and he thinks that if we don’t rein in growth in government deficits we have no chance of achieving this.

    One of the things he is saying is that taxing the rich ever more will not get us out of the bind we are in, so we are going to have to think a bit harder than that, but that is a small corner of the whole picture he is painting.

    I do not hear him say we should deregulate everything. It sounds like he is for balanced regulations that achieve their goals at a reasonable cost, and that he would like more bold experiments to get the right mix of regulation, taxation, and spending in particular areas. Experiments are only worth as much as the honesty with which their results are interpreted, so even this is not a guaranteed way out, but early results show some promise (Swedish schools, congestion pricing).

    People accusing Ferguson of not having any data to back his more laissez-faire agenda need to answer a couple of questions themselves:

    If your goal is at least a living wage for most people, does a minimum wage help? Germany doesn’t have a minimum wage, but it has lower unemployment and higher wages than France, which has a minimum wage. The data on this are famously inconclusive.

    If your goal for “the normal” is people working and paying taxes rather than people not working and receiving benefits, then do you try to subsidize jobs with tax measures that mean more forms to fill out, more employees needed just to fill out forms, and more tax inspectors?

  • Erik

    twenty-niner nails it: “Ferguson is arguing that excess borrowing can have catastrophic consequences because credit markets can start to move adversely faster than corrective measures can take hold.”

    This is not a question of Republican vs. Democrat. Anytime somebody says let’s keep spending more than we earn because this time it’s different, the burden of proof is on them.

    More likely: politics gets in the way and we find out by doing, and good luck to us all!

  • David Wilson

    Maybe both Ferguson and Krugman are wrong. Neither asks the question “Where does money come from?” ALL money comes into being as debt. (YouTube-”Money As Debt”) What if the federal debt IS the money supply? Suggested interview: Ellen Brown, WebOfDebt.Com.

  • Robin Mitchell

    I really enjoyed “The Ascent of Money” (the book– I haven’t seen the series). However, I was quite disappointed with the simplistic prescription to fix the current economic crisis that Niall Ferguson offered in this interview. It makes me question the validity of some of his previous arguments.

    I hope Krugman will be invited on. I am curious to hear him respond directly to this interview.

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