Tuesday, April 17, 2012
Wecome to Credit-topia
What is Capitalism?
Capitalism is investment in plants, business equipment and labor financed by Saved Money.
40 years ago, the United States left this model behind under the leadership of the great Anti-Capitalist President, Ronald Reagan.
We then underwent the great transformation to a Credit-Topia. Credit-topia is an economy based on Consumption financed through Debt.
During this period the Total Credit Market in the US expanded by 50 TRILLION DOLARS. Now 70-75 percent of our economy is based on Personal Consumption. And total debt is 400 percent of GDP.
In a capitalist system the remedy for excessive debt is a period of AUSTERITY. This is now being debated fervently in Washington.
In a Credit-topia, however, Austerity is the recipe for a DEPRESSION OF MASSIVE PROPORTIONS, as EVER MORE CREDIT is needed to simply SERVICE THE DEBT.
In capitalism, the banks efficiently distribute money to be invested in capital.
In Credit-Topia, the banks generate Credit/Debt to fund consumption. Capital is simply a book-keeping trick managed at the banks.
The moment we implement any sort of Austerity Program, the Banks will collapse as they need infinite credit creation to keep servicing their mounting debt. (Unless the Austerity is simply a gimmick aimed at the working poor who have nothing to do with the banks,)
Welcome to Credit-Topia.
See how much longer it lasts.
Buy a little gold - just in case.