The larger issue goes to the conceptual fallacy underlaying our economy. Capitalism is not synonymous with a market based economy. The medium has become the message. The tool has become the god.
As linear, goal oriented creatures in a cyclical, reciprocal, feedback generated reality, people see money as the signal to extract and store, while markets need it to circulate.
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. The hallway is a medium, the hall closet is a store. The average five year old can figure it out, but economists are creatures of the system.
Money is the social contract that enables large societies to function, but when it is treated as a commodity to mine from society, ever more has to be added and ever more metastatic methods of storing what has been extracted have to be devised. Which explains why the financal markets have become this enormous, cancerous blob of parimutual wagering.
As a contract, an accounting device, the asset is backed by a debt. Even gold backed currencies are only the reciept for the gold. Only the actual gold is a commodity.
To store the asset, similar amounts of debt have to be generated.
Starving the regular economy of cash causes it to run on debt and this draws the saved money back into circulation. This creates a centripetal effect, as positive feedback draws the asset to the center, while negative feedback pushes the debt to the edges. As money and banking serve as the value circulation mechanism of the social organism, 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. Which has gone on since the dawn of civilization, as the Ancients used debt jubilees as a circuit breaker, to reset the process.
The other main method is having the government as debtor of last resort. The financial markets couldn't function, without governments siphoning up trillions in surplus investment money. The bloated military and endless wars, with no accountability for strategic ineptitude, are just to make it go away, so more can be borrowed.
The Federal deficit really started with the New Deal, so not only was Roosevelt putting unemployed labor back to work, but unemployed capital, as well.
Volcker didn't cure stagflation with higher interest rates, as that starved money to those willing to borrow and grow the economy and the need for money, while rewarding those with piles of excess cash, with more cash. It was Reaganomics, using the Treasury to borrow up the excess and spend it on the military industrial complex.
The secret sauce of capitalism is public debt backing private wealth.
The functionality of money is in its fungibility, so we own it like we own the section of road we are using, or the air and water flowing through our bodies.It really is a public utility and only works as such. It's not our picture on it, we don't hold the copyrights and are not responsible for maintaining its value, relative to markets.
The fact is that there is not the investment potential to individually save what we need, but we do save for many of the same reasons, so the concept of the commons will eventually have to be revived. As it generally is, from the bottom up, when civil structures do occasionally collapse.
Government, as the executive and regulatory function of society, originated in individual efforts, often institutionalized as forms of monarchy, but as those handed this power lost sight of its civic functions, they were usurped. Banking now appears to be having its own, "Let them eat cake" moment and the pitchforks seem to be gathering.
Not that government and banking can be one and the same. Like the head and heart, they serve vastly different functions and politicians cannot be entrusted with final control over the money supply, as printing an excess is an economic sugar rush, which the financial markets currently show.
As all that public debt starts to unind, it seems likely some degree of disater capitalism will emerge in the US, as those sitting on the largest piles find ways to trade them for remaining public assets.
The irony of our individualistic ethos is the resulting atomized society is more easily dominated by institutional authorities and mediated by a parasitic financial system. Networks, organic, social, economic, matter as much as the nodes inhabiting them.
Life is the anarchies of desire, versus the tyrannies of judgement. The heart and the head.
Social energies, versus civil and cultural structures. Liberal and conservative.
Not all desires are healthy, nor are all decisions wise, so the power fluctuates.
