Sunday night read: our debtor oligarchy
With the ridiculous Silicon Valley Bank failure and the instability and frailty of global finance we’ve been getting a glimpse of during the last few weeks, it’s good not just to panic and/or gloat but to think about the politics and history of money and debt. And my friend Joe Costello does just that in his latest essay.
“The idea that money is just created, at its core nothing more than an article of faith, is the Temple's greatest secret. This is a truth that in no way denigrates money's power, in fact just the opposite, money is one of humankind’s greatest political inventions.
…The Fed became and remains a destructive value inflator, most egregiously inflating values over the last 15 years. The Fed is the banks, but unlike the banks who create money by creating debt, the Fed conjures money out of thin air, simple notations on the banks' electronic ledgers. The Fed's ever looser money policy combined with increasing regulatory laxity created an American economy drowning in debt.
At the top, most debt isn’t paid-off, just constantly refinanced. Total private and public debt rose from $3 for every $1 of GDP in the early 1950s to almost $8 today. For every dollar of real economic activity there's a debt claim of $8. The American economy is infested by parasites. Among other things, this massive debt inflates all asset values well above worth, simultaneously crippling the established economy from much necessary change.
Deregulated banking and the creation of mountains of debt have also facilitated a concentration of wealth to a degree never before seen in American history. Much of this wealth is actually debt, a lot of this debt is bad, so its not really wealth, nonetheless until written-off, wealth it remains.”
Check it out. Hope you all had a great weekend.
—Yasha