Charles Dickens suffered a grave ignominy at the age of 12 that haunted him for the rest of his life.
In 1824 his father John, a naval pay clerk, was arrested for debt. He was taken to the Marshalsea debtors prison, a satanic and imposing collection of brick barracks near the south bank of the Thames in London's Southwark.
Dickens' childhood ended in the same instant, as without a breadwinner and with a mountain of debt, it fell to him to pay his father's creditors and provide an income for the family. He ended up in a blacking factory off The Strand, just over the river from the Marshalsea, where he stuck labels on bottles for six shillings a week.
Dickens was so ashamed of his family's predicament that he never told anyone but his wife, despite using the saga as inspiration for Little Dorrit and many other works.
Too much debt, as Dickens discovered, is a dark oppressor. Debt has sucked the life out of the global economy. An over reliance on it has forced prosperous governments to their knees.
Giant global corporations that were once the epitome of productivity, such as General Motors, resigned into bankruptcy after accumulating too much of it. The value of housing markets from Beijing to Birmingham were both inflated to the stratosphere and dragged to oceanic depths by easy access to it.
Here, thousands have been imprisoned for failing to pay their debts. We learnt last week that close to 7,000 Emiratis, almost 1 per cent of the national population, would be freed from jail thanks to the generosity of Sheikh Khalifa, President of the UAE.
The move was welcome but served to show just how pernicious the over extension of credit has become.
Despite all this, we need debt. Without the availability of credit, businesses cannot function. Neither can households. Who but a handful of the world's wealthy could buy a home or a car without funding at least part of the purchase with a loan?
The need for credit, and the propensity of credit to stimulate the economy, was behind the US Federal Reserve's decision last week to hold interest rates near zero for the next three years.
If the Fed sticks to this decision, however, it will have left interest rates near zero for a total of six years, as it was in December 2008 that it initially made the big cut.
The policy is credited with preventing an even deeper recession than the precipitous decline America has already faced. It has done nothing, however, to address the fundamental problem we all face - the availability of too much cheap debt.
In fact the Fed's policy has encouraged more debt by reducing interest rates for such an extended period.
The Fed is, of course, right to encourage banks to lend to businesses in the current climate. Zero interest rates also discourage households from saving and thereby encourage them to spend. Central banks across Europe are pursuing a similar strategy and are likely to do so for as long as, if not much longer, than the Fed.
Zero interest rates have become something of a panacea, welcomed by all but a few insurance companies with big piles of cash on hand. But governments must all stop this brand of monetary policy as soon as they are able. It is, at its worst, nothing but a slippery slope to the Marshalsea.
What is more, all markets need a barrier to entry otherwise assets very quickly lose their value. Interest rates are that barrier.
If anybody can pop down to the high street and borrow a couple of million dollars to buy a mansion and a Ferrari at virtually no cost, then the mansion and the Ferrari lose much of their value almost instantly.
So not only would you be saddled with a huge debt, you would be saddled with assets at a much reduced value, too. The only way out of that scenario is inflation, and none of us wants that.
Global monetary policy needs urgent reform to help the banking system to get back to its most fundamental service - that of making a profit from lending money at a reasonable rate of interest to enable businesses and households to grow steadily. This will help to restore the value of money and with it a fairer value of assets.
Next week, fans of Dickens will mark the 200th anniversary of his birth. It is a great shame that in all that time our attitude to debt has hardly changed at all.
jdoran@thenational.ae
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ASHES FIXTURES
1st Test: Brisbane, Nov 23-27
2nd Test: Adelaide, Dec 2-6
3rd Test: Perth, Dec 14-18
4th Test: Melbourne, Dec 26-30
5th Test: Sydney, Jan 4-8
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What is a Ponzi scheme?
A fraudulent investment operation where the scammer provides fake reports and generates returns for old investors through money paid by new investors, rather than through ligitimate business activities.
The Perfect Couple
Starring: Nicole Kidman, Liev Schreiber, Jack Reynor
Creator: Jenna Lamia
Rating: 3/5
The Year Earth Changed
Directed by:Tom Beard
Narrated by: Sir David Attenborough
Stars: 4
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The specs
Engine: 2.7-litre 4-cylinder Turbomax
Power: 310hp
Torque: 583Nm
Transmission: 8-speed automatic
Price: From Dh192,500
On sale: Now
WHAT ARE NFTs?
Non-fungible tokens (NFTs) are tokens that represent ownership of unique items. They allow the tokenisation of things such as art, collectibles and even real estate.
An NFT can have only one official owner at one time. And since they're minted and secured on the Ethereum blockchain, no one can modify the record of ownership, not even copy-paste it into a new one.
This means NFTs are not interchangeable and cannot be exchanged with other items. In contrast, fungible items, such as fiat currencies, can be exchanged because their value defines them rather than their unique properties.
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How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
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Company Profile
Name: Thndr
Started: 2019
Co-founders: Ahmad Hammouda and Seif Amr
Sector: FinTech
Headquarters: Egypt
UAE base: Hub71, Abu Dhabi
Current number of staff: More than 150
Funds raised: $22 million
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