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

2. THE FUTURE OF MONEY: CHAPTER THREE
PEOPLE’S CAPITALISM: FINANCIALISATION AND DEBT
1.THE ‘DEMOCRATISATION’ OF DEBT
2.FROM SAVINGS TO CAPITAL INVESTMENT
3.HOUSING: HOME OR ASSET?
4.DEBT AS DEVELOPMENT
5.DEBT AND CAPITALISM

4. 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.

5. 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.

6. 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.

7. 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.

8. 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.

9. 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.

10. 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.

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.
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. Security has become based on investment rather than insurance and collectivised risk.

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.
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.

13. 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)

14. 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)

16. 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)

17. 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)

18. 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)

19. 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)
This is characterised by an approach to savings that
treats them more like capital, with the expectation of
growth over time. (p.63)

20. 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)
This is characterised by an approach to savings that
treats them more like capital, with the expectation of
growth over time. (p.63)

24. The pension debacle is a good example of the total
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)

26. 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)

28. The housing market seemed to create wealth out of
nowhere 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)

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

30. 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.”

31. 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.
The dilemma for the financialised Anglo-american
economies 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)

32. 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.
The debt machine has run out of steam. (p.80)