… If no one borrowed, our capitalist economies would go into severe contraction because the vast majority of our money is created as debt. This is why financial elites were rattled during the global financial crisis: they feared credit would dry up and credit is the lifeblood of global capitalism . But the fact that our democratic governments are not in control of producing the vast majority of new money leads to perverse outcomes for the majority of society, an inherent contradiction brought in to stark relief during crises such as COVID-19. Suddenly, as if in a worldwide war, there is money for just about everything when just months before the pandemic our leaders bowed down to the gods of fiscal discipline and balanced budgets – or at least paid lip service to these concepts. The major problem with the current fiscal–monetary arrangement is that stimulus spending results in ballooning government deficits and mounting national debt, which is then used as a weapon to further neoliberalize the economy when the immediate crisis is over. This means a return to the mantra of fiscal discipline and balanced budgets and more privatizations of public assets and greater cuts to social spending among other potentially harmful social policies. Richard H. Robbins and I termed this the ‘debt-neoliberalism nexus’ in Debt as Power …
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