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REPORTER The debt crisis gripping Europe may present new challenges, but it's also remarkably reminiscent of problems faced in the past says Philip Coggan, author of the new book Paper Promises.
PHILIP COGGAN: "All money these days is a form of debt from someone else. So the money we pay into our bank accounts, that's the bank's debt. The money we pay on our credit card, we are taking on a debt and the bank or credit card company stands behind that. The money we pay - the cash that we pay - is implicitly a debt of the government. We rely on the government to stand behind it. The government needs to raise enough money through tax revenues to make its finances sound. And that's what's broken down in the past, in countries like Germany in the 1920s, Zimbabwe recently. And that's what's so fascinating about the Euro Zone crisis today."
PHILIP COGGAN: "There's no great solution. This is like one of things like the story where you ask directions from a yokel and he says 'well, I wouldn't start from here if I were you'. From here, we know the debts cannot be paid in full. That is, in proper money rather than monopoly money. People will either have to default on their debts, or inflate their debts away."
REPORTER: The subtitle of Coggan's book is Money, Debt and The New World Order. And he has some concerns about the latter.
PHILIP COGGAN: SOUNDBITE: "You only need to look back to the 1930s to see what could go wrong. Basically, in 2008 the central banks and governments stepped in with almost all the ammunition they could through at it. So you have bigger fiscal deficits than at any other time other than world wars. You have interest rates at zero, at levels the Bank of England, which has a 300-year-history has never seen before. Three years on, they've done all that and we're really not out of the mess. Indeed, the level of government financing is itself now part of the problem. And that's the difficulty where do you go?"
REPORTER: Debt was once thought of as a dull subject. Coggan is betting that many people no longer see it that way. Matt Cowan, Reuters.