Read on Twitter
*A fundamental problem is that the modern financial system (post-70’s) inevitably creates debt in excess amounts that doesn’t fund productive investment - but consumption or purchases of already existing assets (stock, homes, land, etc) ~ it’s this debt creation that fuels...
P1
P1
.. the boom-bust and eventual debt overhang that makes a recovery so anemic
EX: the modern banking system (esp. shadow banks) work far more toxic than historic banking in 2 main ways:
1. Banks don’t lend already existing money via savers, but creates credit w/ fractional...
P2
EX: the modern banking system (esp. shadow banks) work far more toxic than historic banking in 2 main ways:
1. Banks don’t lend already existing money via savers, but creates credit w/ fractional...
P2
...reserve banking (this creates new purchasing power that didn’t prev. exist)
2. Most bank lending today (esp. in DM’s) don’t support productive investment, but simply funds debt fueled consumption
Both these things make the economic system fragile via a self reinforcing..
P3
2. Most bank lending today (esp. in DM’s) don’t support productive investment, but simply funds debt fueled consumption
Both these things make the economic system fragile via a self reinforcing..
P3
...credit/asset-price cycle of boom-busts + inevitable debt overhang (deleveraging) periods
See - the system since 1970’s has grown far more unstable as credit growth YoY > GDP growth (by avg. 2.5:1/yr) due to the marginal gains from the 2nd industrial revolution wearing off
P4
See - the system since 1970’s has grown far more unstable as credit growth YoY > GDP growth (by avg. 2.5:1/yr) due to the marginal gains from the 2nd industrial revolution wearing off
P4
... thus to continue economic growth, debt was needed to boost consumption as wages/pricing-power began declining (hence a key reason govs broke from gold)
But now since the world’s locked in this cycle of excessive leverage via unproductive debt to ensure econ growth...
P5
But now since the world’s locked in this cycle of excessive leverage via unproductive debt to ensure econ growth...
P5
...we’re condemned to the inevitable instability of boom-busts + subsequent debt overhangs that leads to: debt-deflation, low growth, and rising inequality
P6
P6
