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Debt: Present and Future, Private and Public, by Andrew Kline

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Date published: 1/20/2013


It's the financial sector. That's where the stories of public and private debt come together. Louis Hyman has written an entertaining history of consumer debt titled "Borrow: The American Way of Debt." He insists we see borrowers and creditors through the same lens. His great insight is to note that the birth and growth of consumer credit has correlated with the shifting of capital investment away from asset creation to the creation of securitized financial instruments.


As the American Dream of home ownership recedes on the horizon, he lets us in on a secret: "Without a good alternative, capital continues to be invested in consumer debt. It is more important to ask why there was so much money to invest in mortgage-backed securities than to ask about the particulars of how those investments went awry. Don't ask just why Americans borrowed; ask why our financial institutions lent!"

His solutions will not seem practical to many. He suggests creating a new market for small-business investment, modeled on the FHA or Fannie Mae, which he calls Bobby Mac, that will make it more profitable for the financial sector to lend to entrepreneurs and small businesses than to speculate on paper promises.

He is onto something. There is nothing like good old-fashioned value. We need to value those who create things again--not those who just leverage assets in order to break them up and sell them off.


Thrift was summed up by Benjamin Franklin as "industry, frugality, and generosity." Thrift is not just about "saving" or "bargain-hunting." Thrift is a big idea. Stated as a theorem, thrift is "the ethic of wise use." Ever since "Poor Richard's Almanac" laid a claim on the American character, we have learned that "the way to wealth" is some combination of being productive, shunning waste and extravagance, saving and learning to build capacity, and being a steward who is future-minded about the better legacy we are meant to leave to our fellow citizens. In order to thrive in every imaginable condition, both individuals and governments are challenged to use their resources most wisely.

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Andrew Kline is the director of the John Templeton Center for Thrift and Generosity at the Institute for American Values.