The elephant in the room is the financialization of the economy.
We are goal oriented creatures in a cyclical, feedback driven reality, so while markets need money to circulate, in order to function, we treat it as the signal to extract from the noise of society and the economy. Necessitating ever more to be added and ever more precarious ways to store what has been extracted.
Econ 101 says money is both medium of exchange and store of value, yet a medium is dynamic, while a store is static. Blood is a medium, fat is a store. Roads are a medium, parking lots are a store.
As a medium it largely functions as a contract, with one side an asset and the other a debt, so to store the asset , similar amounts of debt have to be generated.
For one thing, this creates a centripetal effect, as positive feedback draws the asset to the center of the community, while negative feedback pushes the debt to the edges. Since finance functions as the value distribution mechanism of the entire community, this is analogous to the heart telling the hands and feet they don’t need so much blood and should work harder for what they do get.
The Ancients developed debt jubilees to reset this dynamic, but after a few centuries of colonialism and industrialization, we have had the resources to only grow, without dealing with the overall feedback.
The other primary issue is that government has been induced to be debtor of last resort. Given the Federal Debt really began with the New Deal, not only was Roosevelt putting unemployed labor back to work, but unemployed capital, as well.
It is quite evident that our capital markets could not function, without governments siphoning up trillions of dollars in apparently surplus money. Where would it go, otherwise? Derivatives?
So the secret sauce of capitalism is that public debt back private wealth. Consequently we can have endless, strategically inept wars and no one is held to account, because their ultimate function is to spend the money, in order that more can be borrowed.
We could spend it in ways which build on the underlaying infrastructure of society, but given all our technological advances, we are still fairly primitive socially, so fear and greed still rule.
The fact is that there isn’t sufficient productive investment for everyone to store wealth abstractly, so given we all mostly save for many of the same reasons, such as housing, raising children, healthcare, retirement, etc, if these could be invested in directly, as community assets and networks, rather than everyone trying to save for them individually, we would have healthier soceities and environments, as they would be stores of value, not just resources to be mined.
The irony of our individualistic ethos is that it creates an atomized culture that is more easily dominated by institutional authority and mediated by a predatory financial system.
As the executive and regulatory function, government is analogous to the central nervous system, as finance is to the circulation system. Government was originally private, but when monarchs lost sight of the fact they served a function to society, in order to be served by it, the system mutated into a public utility. finance is now having its; “Let them eat cake.” moment.
It is a two way street. Feedback.
Not that banking can be a direct function of government, just as the head and heart are separate organs, serving different functions. Politicians live and die on the hope they inspire and since we experience money as quantified hope, the tendency is to print more money, when other efforts to lead are failing.
There is only so much you can cheat on the foundations, in order to store more gold in the penthouse, before it does more than just trickle down. Look at Boeing.
