"I think “creditism” is a better name for it......
- we have a new economic system. This system is not capitalism anymore.
Capitalism was a system that was dominated by the private sector and the growth dynamic of capitalism worked like this: businessmen would invest, some of them would make a profit, they would save that money through capital accumulation and they would invest and profit and capital accumulation, investment, profit, capital accumulation. And that drove the economic dynamic. That’s not the way our system has worked for decades. Our system has been driven by credit creation, followed by consumption, credit creation and consumption; and that’s driven our growth dynamic. And it’s worked wonderfully. It’s created very rapid economic growth all around the world. The problem is this new system is not capitalism. I think “creditism” is a better name for it.
So in our world, if the government spends less money now, interest rates are not going to go down; interest rates are already at rock bottom levels. So if the government spends less money, the GDP is going to shrink, not only by the amount the government spends less, but because when the government spends less, fewer will have jobs so that personal consumption will shrink and therefore business investment will also shrink. In other words, the economy will spiral into a severe recession/depression.
Now, that’s where we need to begin this national debate. It’s terribly unfortunate we've gotten ourselves into this situation where our economy has been fueled by a $50 trillion expansion of credit denominated in paper money, but it’s created a US and a global credit bubble that has been fueled by credit expansion. Now the credit can’t expand anymore and it’s only the government sector that can take on additional debt; the private sector cannot take on any additional debt because they don’t make enough, their salaries aren’t going up anymore because of globalization so they can’t afford anymore debt. So this means we're dependent on government spending whether we like it or not. This is truly regrettable but this is the truth."
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