Me: Yes, QE is a shell game and banks can only lend what we are willing to borrow. Unfortunately:
1) due to being normally aquisitive and naturally wanting all of the things modern living can bring us lots of people are willing to borrow more than they CAN repay
2) most businesses have only the choice to continually borrow or go out of business….because their flow of costs exceeds their flow of revenue….because modern economies now inherently create a greater flow of costs than they simultaneously create a flow of individual incomes with which to liquidate those costs (this is A + B in a nutshell)….setting up the compulsive imperative to borrow….or the economy promptly goes into recession or worse.
It’s a set up for the banks who rule with their paradigm of Debt Only at all times while being profitable during “good” times and getting bailed out so as to profit during “bad” times.
Heterodox economists are discovering this alternately raped and dominated financial chaos now, but even the good ones like Steve Keen do not fully grasp it. His de-bunking of Dynamic Stochastic General Equilibrium is correct, but because he was brought up within the paradigm of Debt Only he’s still believing that private banking/money creation is a legitimate business model even though it isn’t because its an additional flow of costs post retail sale. He hasn’t stepped through that mirror yet, and into the new paradigm of Direct and Reciprocal Monetary Gifting with a publicly administered national banking system based on and aligned with the policies of a universal dividend and high percentage discount/rebate policies throughout the entire length of the economic process.
Douglas was brilliantly right 90 years ago with his cost accounting perspective on the economy, but even Douglas did not fully see how to bring the new paradigm fully into being probably because he was Tory oriented and so did not realize that private finance was neither a legitimate business model nor able to be ethically controlled because its product was so utterly essential for the economy to function and hence was problematically felonious domination waiting to happen.
Douglas should have recognized the former having located the correct termination point of the economy (retail sale). Also (apparently) he did not do a thorough exegesis of the aspects of the concept behind Social Credit and the new paradigm, namely grace, and so did not fully recognize that one of its major aspects, abundance, was the key to raising Social Credit to the level of paradigm change. Hence his followers eventually fell under the austere spell of General Equilibrium analysis.
Public Banking and Wisdomics-Gracenomics need to integrate their messages and take the resulting structural and policy full solutions directly to the “people”. Heterodox academic economists are wasting their time trying to get ego involved orthodox academics to see and affirm their heterodox and yet still incomplete and non-paradigm changing critiques. Showing the extremely large constituencies of the small to medium sized business community, students and literally EVERY individual how such a system of banking and monetary policies are in their interests is the best and correct way to accomplish the political change necessary to get such a program implemented.
AT: Here’s tea link to see a historical plot of the Fed’s assets. Over ten years, it has gone from $0.8 trillion in 2008 to $4.4 trillion in 2014-2018, which is a 5.5x factor, or 550%.
JD: Thanks Ann. The next question is why so much after the crash?
Me: More likely it was simply necessary for the survival of their paradigm and the system they dominate. Catastropes like the Great Depression are understandbly great opportunities for change due to the pain and suffering they cause. Letting that happen again would have been enough to make people see through all of the hypnotic and fallacious theoretical justifications of the system to consider even more than the pinnacle achivement of the last one, social security, and actually consider the policies of paradigm change.