Monday 30 January 2017

Why Our System Is Broken: Cheap Credit Is King

oftwominds - Charles Hugh Smith

You want to fix the economic system, reduce political bribery and reduce rising income inequality? Shut off the cheap unlimited credit spigot to banks, financiers and corporations.
Cheap credit--newly issued money that can be borrowed at low rates of interest--is presented as the savior of our economic system, but in reality, it's why our system is broken. The conventional economic pitch goes like this: cheap credit enables consumers to buy more goods and services (and since the system needs growth or it implodes, that's good).
Cheap credit also enables companies to invest in new productive assets (capital).
Last but not least, low rates of interest enables the government at all levels to borrow money at relatively low cost.

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