Fifteen years after the collapse of the US investment bank Lehman Brothers triggered a devastating global financial crisis, the banking system is in trouble again. Central bankers and financial regulators each seem to bear some of the blame for the recent tumult, but there is significant disagreement over how much – and what, if anything, can be done to avoid a deeper crisis.
BOSTON – The Bible enjoins us to do better unto our children than we would do unto ourselves: “From generation to generation.” But, in much of the developed world, we have foresworn that sacred pledge. For six decades, the watchword of our economic faith has been quite different: “Taketh from the young and giveth to the old.”
We have minded our words carefully in describing this moral transgression, lest we provide a clear record of our fiscal child abuse. Our debts are clothed primarily in benign-sounding language like “pension benefits” and “health-care benefits,” not official IOUs.
By calling what’s being taken from the young “taxes,” rather than “borrowing” – that is, a promise to repay far more than what’s being taken – the implicit debts have been intentionally kept off the books.
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