Crime Against Humanity: Pensée Unique in Economics, 47

To put all this in perspective before returning to the subject of how mainstream economics deals with the occulted real cause, let’s consider how those responsible for such crises create them in the first place, and then react to them by dragging the rest of us down.
Banks create credit and use it for speculation, either directly or by lending it to other speculators. Speculation does not produce anything valuable, hence interests and profits can only derive from more speculators or victims feeding the pyramid scheme. For more speculators to get on board and feed the pyramid scheme, more credit must be created by banks for them in the first place. Speculators line their pockets. What is called “systemic risk” builds up. As it builds up, so does the inflating pressure of the specuilative bubble. The higher its inflating pressure, the little it takes to blow it up. It’s just a matter of time, and sooner or later the time comes. The higher the inflating pressure, the slighter the decline in feeding the scheme that is enough to reach the tipping point, and the more violent the chain reaction that sets off. Speculative values begin to fall. To the degree they are close to the bottom of the pyramid, speculators begin to become insolvent or bankrupt. Debts not serviced by speculators become bad debts for the banks. Speculative values were also used as loan collateral, thus banks’ assets, foreclosed or not, are scaled down. What is called banks’ “risk aversion” builds up. As it builds up, banks create and extend less and less credit and so the circulating purchasing power shrinks. Being circulating purchasing power the deciding factor of the economy, its shrinkage keeps on worsening it, regardless of whatever other ineffective tools are used. As banks’ risk aversion builds up, it extends to productive borrowers, thus further depressing the economy. The worse productive economy gets, the more speculation on falling values sets in, and the more banks’ risk aversion builds up, in a self−feeding dwindling spiral. The worse things get, the longer we’ll all have to pay a higher price in our flesh and lives, while the top speculators enjoy their loot.