>>3246
For the economic side, Princes of the Yen was a good documentary on how the Bank of Japan decided to fuck over the Japanese economy for ideological reasons. For further information on why the Japanese economy is incapable of growth see Richard Koo's theory of debt deflation. The Japanese economy loaded up on too much private debt in the 1980s that could never be paid off, so for the past 40 years the government has had the choice of either a quick hard crash or taking on a massive public debt to bailout businesses so they don't face an unemployment crisis. This is what the US is going through now, and China will be facing soon. The biggest key to understand the debt bubble though, is the 1997 Asian financial crisis. Long story ahead:
Who is underwriting all this bad American debt? Answer is East Asia. After the 1997 Asian financial crisis, the economies of Southeast Asia along with China decided that they would never indebt themselves to foreigners again, and become net lenders to the United States and other developed economies. By selling their domestic currency to purchase American debt issued by American banks, they drove up the value of American financial assets, which had significant negative effects. Number one, it fuelled bubbles. The increase in asset prices led to speculative buying that caused the dot-com, housing, and the current debt bubble. Number two, it propped up the value of the USD. The Dollar is overvalued considering the actual performance of the American economy. However, because foreign investors keep underwriting American debt to store their wealth in American financial assets, the Dollar never drops to a realistic exchange rate. This is bad for American business: it keeps prices of American goods and services too high to be globally competitive, leading to increased unemployment. Lastly it enabled the Fed to start on the course of action it is engaging in today. As foreigners overinvest in American financial assets regardless of the rate of return, the Fed was able to cut interest rates again and again and again to zero because for the international market it didn't matter - their primary concern was safety. If the world was on a gold standard, this wouldn't be a problem as the world would store its wealth in gold reserves which are not partial to any country.
Cutting interest rates allows the banks to make more and more loans, and indebt more and more of the population. For those at the bottom, they can never escape, but for those at the top, it's perfect. However, the more and more debt you load on, the worse and worse economic performance gets: the money to pay for the debt has to come from somewhere, it doesn't appear out of thin air. That money has been coming out of the wages and savings of the average American household. If your business has lost market share because of competitive devaluation, you have to go into debt. If you load up on debt, you have to cut spending. If you cut spending, you have to cut pay and fire workers. Lastly, households that have stagnant incomes or lost jobs can only provide for themselves by borrowing or draining their savings. When the central bank is creating inflation to force households to spend, your savings only lose value, so most practical course of action an individual can take is taking on debt. This keeps the economy juiced for a few years, but at some point, the party stops. Everything is too overpriced to continue functioning, markets are paralyzed as investors fear their savings have become worthless, money stops flowing to lenders, banks face bankruptcy. This was what happened in 2008.
The US government then stepped in, and the Federal Reserve, and decided it was going to borrow on the credit of the American taxpayer to keep the system running. Money that the citizens of the United States had forfeited to their government with the understanding that it would be used to keep them safe and prosperous, was used to save international banking. This kept the banks afloat, and it saved the investments of foreign lenders. For the average American though, it saved nothing. They lost their jobs, their homes, and their health. They would struggle to rebuild their incomes for the next decade while major banks would accelerate the growth of China. In 2015 though, the cracks started showing in Asia. The Shanghai stock exchange crashed. This led to a flight of capital back to the American domestic economy. Banks started lending left and right to companies that had never made a profit. The Fed did nothing with interest rates as asset valuations began to soar, because employment was still not growing. Employment had no reason to grow though, because these companies were never profitable. They were only making money because some sucker was willing to fund them. Real employment rates only began picking up in 2016, once Americans finally had enough in the bank to be able to participate comfortably in consumer spending. This only led to the debt situation becoming worse though, because investors entered into a euphoric mood and poured money left and right into unicorn assets with no intrinsic value.
This began breaking apart in late 2019. The United States was near full employment, and incomes could not grow because American companies were still either uncompetitive or outright fraudulent. The Fed had to cut interest rates and reintroduce QE. And then the pandemic hit. The market was on the verge of another liquidity crisis. The Fed's priority: to maintain price stability. The money to keep prices from falling had to come from somewhere. So, it began to enable direct asset purchases. Lending out money that never existed to Blackrock to purchase stocks and bonds to keep prices from falling. Great for shareholders, but an utter disaster for the economy. Prices are too high for individuals to participate. The more the Fed keeps this up, the worse real growth will be, and this will cause companies to go bankrupt across the board. The only way you can can pay off a debt is if someone else is spending. If you cannot pay, you default. People are not spending, because they have lost jobs, lost income, and prices have not fallen to reflect lost demand. The smart shareholders will start selling off USD for gold and other stores of value because they know the longer they hold on, the less it will be worth. The Dollar is backed by the value of financial assets, and when those assets are worthless because the companies they belong to have gone bankrupt, the Dollar will be worthless in international exchange. The market will deflate while prices inflate as goods can no longer be sourced from abroad. This could all have been prevented by a stable exchange standard such as gold, which have would prevented the creation of money by fiat to settle debts that never should have been issued, since ledgers would keep track of the real quantity of money in circulation to ensure that all balance sheets globally are settled.
The basis of this argument can be seen in the book "Trade Wars are Class War" by Michael Pettis and Matthew Klein released in May 2020, however their conclusion is flawed because they hope like many economists do that government intervention can resolve the issue rather than a return to an independent issuance of money. In the past when democratic governments did represent the craftsman, the farmer, and the shopkeep, they did indeed have the motivation to keep these forces at bay. In the modern day however, when governments have been captured by bankers, corporate monopolists, and social ideologues, all of whom benefit from the current disorder, in my opinion they no longer have this capacity. Now, independence in financial affairs must be established by decentralized consensus, rather than conferred from above. The founding fathers may have curtailed the infinity of government, but it is up to our hands to curtail the infinity of the bank.