DAS KAPITAL: Debt Deflation & The Neo-Feudal Empire – By Michael Hudson | RIELPOLITIK

https://rielpolitik.com/2020/10/27/das-kapital-debt-deflation-the-neo-feudal-empire-by-michael-hudson/

… The problem is that as people owe more and more debt service, they have less and less to spend on goods and services and so they’re not able to buy what they produce, and so employment shrinks and the economy shrinks. And part of the problem is not simply the growth of debt, but what the debt is for, and in the textbooks debt is supposed to be for productive purposes. The myth is that it’s for building factories and means of production and increases everybody’s prosperity, but that’s not what debt’s about. That’s what maybe stock issues are about, but it’s not what debt is about.

80% of debt is issued in the form of mortgages and they’re lent to real estate and the effect of real estate debt – making credit, loosening the credit terms more and more, lending more and more against properties, higher proportions, lower down payment, lower amortization rates – is that property prices are inflated. Housing prices are inflated. Commercial real estate prices are inflated.

So debt is being created for all the wrong things. It’s been decoupled from the economy at large, and it’s being taken on for things that really used to be considered public services like education. Used to be that all economies provided schooling free as a public service because they realized that education is how you increase productivity. But now, more and more, education is just to get a job sort of like a union card…