This is Naked Capitalism fundraising week. 1411 donors have already invested in our efforts to combat corruption and predatory conduct, particularly in the financial realm. Please join us and participate via our donation page, which shows how to give via check, credit card, debit card, or PayPal. Read about why we’re doing this fundraiser, what we’ve accomplished in the last year, and our current goal, It’s Time for a Debt ‘Jubilee,’” and he generously agreed to sit down for a 45-minute conversation with me — I’ve posted it on YouTube: Interview with Richard Vague for Naked Capitalism
For readers who are unfamiliar with the genuine radicalism of Vague’s thought, here are, to get you started, four of his fundamental findings. They are, I think, earthshaking — in any event I certainly thought so when he first explained them to me:
First, economic crises, like the Great Depressionand the Great Recession, are caused by runaway lending in the private sector: widespread overlending for private projectsbegets widespread overcapacity which in turn begets widespread bad loans and widespread bank failures.
Second, inflation is notcaused by excessive government spending. As Vague writes in “It’s Time for a Debt ‘Jubilee’”:
During the entire 40-year explosion of government debt from 1981 to 2020, price inflation has plummeted, not increased; interest rates have collapsed, not risen; buyers for government debt have been plentiful, not scarce, as evidenced by those declining rates; and private sector spending has proceeded apace.
Third, even apart from economic crises, excess privatedebt should be our primary economic concern. Vague writes:
Government debt has increased markedly and gets the most attention, but we should be more concerned about the rapid growth in private-sector debt…. The problem of private debt could not be more consequential. It’s been an underlying issue in several of the decade’s worst problems, from the 2008 global crisis and slow growth that followed the Great Recession to the discontent that led to Donald Trump’s election in 2016.
Fourth, it is the necessary and proper role of the governmentto reduce onerous levels of private debt and to mitigateprivate financial crises. Vague applauds the Fed’s performance in 2008 and again this year, but he looks back with dismay on the President Obama’s failure to help the millions of Americans who got foreclosed on back then, just as he is now dismayed by the failure of the current President and Congress to get sufficient helicopter money to the millions of Americans who need help during this emergency. Thus Vague writes in a new article in The Hill:
The Federal Reserve, by its dramatic support of the credit markets, has given crucial support to the assets primarily owned by the wealthiest Americans. It has kept the well-off very well off. The reluctance of Congress to enact additional aid would seem to convey an unwillingness to provide the support most needed by average working Americans.
We need to listen closely to Richard Vague, and then pray that some of our politicians do so too.