I didn’t plan on watching the whole talk by Economist Michael Hudson but, as an old MBA student, I couldn’t let go.
Hudson makes the argument that executives running the conventional banking system have created a false belief that credit is good and leads to job growth. In fact, much of the increase in credit over last 30 years has gone to buying real estate and other non-capital assets, NOT to capital investments that lead directly to jobs.
Easy credit raises the price of these assets and more and more debt accrues. When the bubble bursts and values drop, banks take over the assets through foreclosures. When governments (local, state, and federal) can’t make payments, previously public assets and infrastructure (water, sewer, schools, land, etc.) become privatized in what is essentially a “land grab.”
In the past, it would take a war for such a land grab to happen. Hudson says that today our system is structured so that this happens.