Excerpts
“The interests of finance are different from those of the production-and-consumption economy. In fact, they are becoming inherently antagonistic. Take for example the idea that you can help the economy by lowering interest rates. The aim is to bail out the financial sector by raising asset prices even further. People thought that asset price inflation would make them rich – the inflation that Mr. Greenspan called wealth creation. But borrowing to ride the wave of asset-price inflation leaves a legacy of interest and principal charges to be worked off. Asset prices are bid up on credit – that is, by debt leveraging."
“Helping the financial sector load down the economy with debt to bid up the price of housing makes prospective homebuyers pay more. And bidding up stock and bond prices increases the cost to future retirees of buying a retirement income. To make matters worse, asset-price inflation diverts spending into speculation, away from tangible investment in the real economy. So we are less able to work off our debts.”
**More regulation, less central planning **
By Eric Janszen
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