1st – The whole reason capitalism can work and pay interest is because of debt and new money creation, primarily through loans. In a fixed money system without new money being created, it is obvious that the zero-sum state forces many loans to fail, regardless of the merit of the underlying value creation, if interest is paid. So debt is, in itself, not the problem.
The question is, “Is this debt productive? Does it create real value that corresponds to it?”
2nd – New money creation through debt (and by creation of fiat money) only works if loan grantors (or fiat creators) are giving money to value creating enterprises/things. The crash was triggered/created by things like deliberately making loans in order to “profit” from CDS’s when the loans failed. That is our core problem.
What Citigroup did is, morally and legally, the equivalent of buying one or more insurance policies on buildings you don’t own after you douse them with gasoline and light them on fire. Your strategy is to profit hugely from the arson you commit.
3rd – We are now following up the crash with policy that is guaranteed to prevent growth and a healthy economy. We are giving at least $1 trillion a year to the Banks that were run as criminal enterprises. But, without borrowers with good credit, no loans will be made. No loans, no money multiplier. This problem is so fundamental it is ridiculous. That fact makes it hard not to conclude that the president’s advisers and the boys in critical seats at the Fed are con men or liars.
4th – If we spent just $1 trillion per year above our current budget on things like orbiting solar power satellites beaming the greenest energy possible to earth, (i.e. high ROI projects) what would that do? In a rough 5% reserve system, the maximum money multiple would be 20X. We would, in practice, have a multiple of around 8X or 10X on that money. For conservatism, call it 8X. $16 trillion in new money creation on top of the $2 trillion. Spend $2 trillion per year of that created money on new jobs at $100K cost per job, that’s 20 million new jobs. Those are good jobs, not houseboy jobs in somebody’s mansion.
Come Mr. President. Ronald Reagan put Jackie Presser in prison after Jackie gave his voters to Reagan. Long past time for you to step up.