When we talk about debt and its impact on our economy, we almost always mean ‘government debt’. However, this is only a small part of the picture: individuals, private firms and households owe trillions, and these private debts are vital to understanding the economy.

In this iconoclastic book, Richard Vague examines the assets, liabilities and incomes of the entire country, private and public sector, to reveal its net worth. His holistic analysis shows that the real factor that drives both financial crises and spiralling inequality—but also, paradoxically, economic growth—is ever rising private debt. The paradox is that while debt is essential and our economy relies on it, it also brings instability unless it is periodically deleveraged—and that is very hard to do. It can, however, be carefully managed, and Vague ends the book by showing how to do so in policy areas ranging from trade and housing to financial policy and student debt.

Underpinned by pioneering data analysis and the author’s lifetime of experience in the financial world, this book is essential for anyone who wants to understand the deep, underlying dynamics of the American economy.

Richard Vague is Secretary of Banking and Securities for the Commonwealth of Pennsylvania.