Here's The Problem: The Pie Is Shrinking
Meanwhile, the elites benefiting from financialization and leverage are reaping the immense rewards of inflating phantom wealth via credit/asset bubbles.Since the return on investment economy-wide is stagnating, the trick here is to create money out of thin air and use that money to buy up income-producing assets. This inflates asset bubbles which further expand the financial elites' phantom wealth and allows them to keep buying more income streams.
The trickery of creating phantom wealth enables the elites to increase their income and wealth well ahead of what's lost to inflation.
Creating money out of thin air doesn't actually increase surplus or prosperity, it just shifts the losses to non-elites. Wealth and unearned income are concentrated in the hands of the financial elites, and the bottom 95% of those with earned income are slowly boiled frogs, only dimly aware that the purchasing power of their wages is declining but at a pace just leisurely enough to avoid triggering a political rebellion.
Depending on expanding debt to fuel expanding prosperity has this funny feature called interest: since earned income is stagnating or declining when adjusted for real-world inflation for the bottom 95%, interest payments reduce disposable income--every dollar devoted to paying interest on rising debt is a dollar that can't be spent or invested.
You see the irony: depending on expanding debt for "growth" eventually chokes future borrowing, spending and investing, causing "growth" to collapse in a broken heap. Without more debt, "growth" is not possible in a world of stagnant earned income and credit-asset bubbles.
Central banks have played a game of reducing interest as a means of enabling debt to expand even as the purchasing power of earned income declines, but the game ends at zero. At some point borrowers can't even afford to make payments of principal, and then default becomes inevitable.
At that point, the only way to enable debt-serfs to service their debts is to give them free money, i.e. Universal Basic Income (UBI). Don't kid yourself that the proponents of UBI are wunnerful folks just trying to be generous; the only purpose of UBI is to enable debt-serfs to keep servicing their debts and stave off the day of reckoning when the debt bubble bursts and everyone wakes up to the reality that prosperity stopped expanding long ago.
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