The once-thriving era of debt inflation is now undergoing a harrowing transformation into a downward spiral of rapid debt deflation. Debts are being settled, written off, or defaulted on, while borrowing, especially in realms like mortgages, is dwindling. This trajectory points us toward a period of disinflation, a perilous prospect for the millions deeply entrenched in debt.

In the fourteen years leading up to the rate hikes of 2022, central bankers maintained interest rates below 1%. This strategy primarily aimed at providing “easy money” to facilitate the recovery of Wall Street and Bay Street from the ravages of the Great Financial Crisis.

Throughout this period, interest rates lagged behind inflation, effectively rendering them negative. In a landscape marked by credit deregulation, negative rates served as a potent incentive for borrowing. Those seeking funds were rewarded for taking on debt, with money readily available on a no-questions-asked basis.

Central bankers leveraged Quantitative Easing policies, flooding the system with substantial credit benefiting various entities: governments, commercial banks, shadow banks, pension funds, hedge funds, and insurance companies.

This surge of “easy money” fueled a ballooning debt environment—a colossal bubble of indebtedness—that, in turn, propelled asset prices to new heights. However, the tide is now turning.

A significant portion of this credit and debt went into speculative ventures in finance and real estate. Globally, only meagre sums were directed towards investments in productive endeavours that create employment, generate income, or secure a more sustainable future for humanity. 

The root of this imbalance lies in our rentier-driven global economy, where investors reap greater rewards from asset rents than from productive investments aimed at fostering innovation and growth.


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