1. Economics As If People Really Mattered
Week Four – Financialisation and Debt

3. Money circulation through the
financial system is seen as the
outcome of private economic acts,
not as a function of social
relationships and public authority. P.2

6. money rests upon a social and
political base, a combination of
social conventions, banking systems,
public trust and state authority.

10. T E F URE OF M
H UT ONE CH T R T RE
Y: AP E H E
PE L ’S CAP AL : F
OP E IT ISM INANCIALISATION AND DE T
B
1.T E ‘DE OCRAT
H M ISATION’ OF DE T
B
2.FROM SAVINGS T CAPIT INVE M NT
O AL ST E
3.HOUSING: H E OR ASSE ?
OM T
4.DE T AS DE L M NT
B VE OP E
5.DE T AND CAP AL
B IT ISM

11. 1. Financialisation means the increasing role of financial motives, financial markets,
financial actors and financial institutions in the operation of the domestic and
international economics.

12. 1. Financialisation means the increasing role of financial motives, financial markets,
financial actors and financial institutions in the operation of the domestic and
international economics.
2. At the heart of financialisation was the assumption that money can be made out of
money and that money in itself can secure a person’s economic life.

13. 1. Financialisation means the increasing role of financial motives, financial markets,
financial actors and financial institutions in the operation of the domestic and
international economics.
2. At the heart of financialisation was the assumption that money can be made out of
money and that money in itself can secure a person’s economic life.
3. The banking system makes more money by putting people into debt than by
encouraging them to save.

14. 1. Financialisation means the increasing role of financial motives, financial markets,
financial actors and financial institutions in the operation of the domestic and
international economics.
2. At the heart of financialisation was the assumption that money can be made out of
money and that money in itself can secure a person’s economic life.
3. The banking system makes more money by putting people into debt than be
encouraging them to save.
4. Banking is about selling a single product: debt.

15. 1. Financialisation means the increasing role of financial motives, financial markets,
financial actors and financial institutions in the operation of the domestic and
international economics.
2. At the heart of financialisation was the assumption that money can be made out of
money and that money in itself can secure a person’s economic life.
3. The banking system makes more money by putting people into debt than be
encouraging them to save.
4. Banking is about selling a single product: debt.
5. The most profitable borrowers for credit companies are those least able to pay.

16. 1. Financialisation means the increasing role of financial motives, financial markets,
financial actors and financial institutions in the operation of the domestic and
international economics.
2. At the heart of financialisation was the assumption that money can be made out of
money and that money in itself can secure a person’s economic life.
3. The banking system makes more money by putting people into debt than be
encouraging them to save.
4. Banking is about selling a single product: debt.
5. The most profitable borrowers for credit companies are those least able to pay.
6. The ideal borrower is the regular defaulter.

17. 1. Financialisation means the increasing role of financial motives, financial markets,
financial actors and financial institutions in the operation of the domestic and
international economics.
2. At the heart of financialisation was the assumption that money can be made out of
money and that money in itself can secure a person’s economic life.
3. The banking system makes more money by putting people into debt than be
encouraging them to save.
4. Banking is about selling a single product: debt.
5. The most profitable borrowers for credit companies are those least able to pay.
6. The ideal borrower is the regular defaulter.
7. While many households have been sucked into financialisation through high levels of
debt, people have also been sucked in through the promise of profitable investment.

18. 1. Financialisation means the increasing role of financial motives, financial markets,
financial actors and financial institutions in the operation of the domestic and
international economics.
2. At the heart of financialisation was the assumption that money can be made out of
money and that money in itself can secure a person’s economic life.
3. The banking system makes more money by putting people into debt than be
encouraging them to save.
4. Banking is about selling a single product: debt.
5. The most profitable borrowers for credit companies are those least able to pay.
6. The ideal borrower is the regular defaulter.
7. While many households have been sucked into financialisation through high levels of
debt, people have also been sucked in through the promise of profitable investment.
8. The idea is that money or assets can be put aside so that welfare needs can be
bought in the market place rather than being available as social services as required.

19. 1. Financialisation means the increasing role of financial motives, financial markets,
financial actors and financial institutions in the operation of the domestic and
international economics.
2. At the heart of financialisation was the assumption that money can be made out of
money and that money in itself can secure a person’s economic life.
3. The banking system makes more money by putting people into debt than be
encouraging them to save.
4. Banking is about selling a single product: debt.
5. The most profitable borrowers for credit companies are those least able to pay.
6. The ideal borrower is the regular defaulter.
7. While many households have been sucked into financialisation through high levels of
debt, people have also been sucked in through the promise of profitable investment.
8. The idea is that money or assets can be put aside so that welfare needs can be
bought in the market place rather than being available as social services as required.
9. The ideal [for asset/credit traders] is inflation in the investment market and stable
prices in the consumer market.

20. At the heart of financialisation was the assumption that
money can be made out of money and that money in itself can
secure a person’s economic life. (p.59)

21. At the heart of financialisation was the assumption that
money can be made out of money and that money in itself can
secure a person’s economic life. (p.59)
… the banking system makes more money by putting people
into debt than by encouraging them to save:
“banking is about selling a single product: debt.” (p.61)

23. A pattern emerged that was to recur in the housing market:
the most profitable borrowers for the credit companies were
those least able to pay. (p.61)

24. A pattern emerged that was to recur in the housing market:
the most profitable borrowers for the credit companies were
those least able to pay. (p.61)
… most of these [new] bankruptcies don’t represent profligate
expenditure but people. Particularly women, trying to keep
their head above water.
A major cause of indebtedness in the US is borrowing to pay
for health care. (p.62)

25. 2. From savings to capital investment
While many household have been sucked into financialisation
through high levels of debt, people have also been sucked in
through the promise of profitable investment. (p.63)

26. 2. From savings to capital investment
While many household have been sucked into financialisation
through high levels of debt, people have also been sucked in
through the promise of profitable investment. (p.63)
T is characterised by an approach to savings that treats
his
them more like capital, with the expectation of growth over
time. (p.63)

27. 2. From savings to capital investment
While many household have been sucked into financialisation
through high levels of debt, people have also been sucked in
through the promise of profitable investment. (p.63)
T is characterised by an approach to savings that treats
his
them more like capital, with the expectation of growth over
time. (p.63)

31. T pension debacle is a good example of the total
he
inappropriateness of a market approach to provisioning. It
reveals a complete lack of economic wisdom and foresight on
the part of major employees who did not anticipate the
problems that would be created by the business cycle. (p.65)

33. 3. Housing: Home or Asset?
Mortgage debt has been a major aspect of money creation in
the second half of the twentieth century, accounting for up to
80 per cent of personal debt in the US and 60 per cent of bank
loans. (p.68)
Homes were seen as a kind of milch cow that could be milked
for consumer spending or for life cycle costs such as college
fees, health care needs or income in old age. (p.68)

35. T housing market seemed to create wealth out of nowhere
he
which, given the huge shift to bank-based credit money
creation, is exactly what it was doing. House price inflation
created ideological support for financialisation, capital
accumulation and the capitalist market system. (p.70)
An asset-based welfare system with its promises of
opportunity and choice will inevitably be underminded if asset
prices start to drop. (p.71)

36. 4. Debt as development
… achieving social change through economic
empowerment…
… a market solution to poverty.
(p.76)

37. 5. Debt and Capitalism
In the short term, together with globalised cheap labour
goods, [debt] appeared to overcome Marx’s prediction that
capitalism would be in crisis if the mass of the people in
society did not receive enough in wages to enable them to
buy the products of the economy. (p.79)
Harvey: “ever expanding endebtedness is a perilous way to
keep consumerism alive.”

38. Debt generated growth was reaching its limit: in the US by
September 2003 it was taking six dollars of extra debt to
generate one dollar of growth.
T dilemma for the financialised Anglo-american economies
he
was that debt had become a (failing) agent of growth and a
heavy burden to borrowers.
When the only source of future income is more debt being
issued, it cannot be a secure source of wealth. (p.80)

39. While bank issue of debt money has been central to the
growth of capitalism it has its own limits and contradictions.
When debt issue becomes the only engine of capitalist growth
it must eventually come up against Marx’s contradiction that,
if profit is to be extracted, people will not have sufficient
money to enable them to consume all the goods produced,
even with debt.
T debt machine has run out of steam. (p.80)
he