Sooo, you wanna know what I learned this week?
So basically, I thought I was going crazy this week. Because what else is thinking something is crazy that no one else thinks is? Isn’t crazy always defined by comparison? The frame of comparison is flexible, though.
Money, bubbles and broken systems
Anyway, the whole spiral started with the movie The Big Short, which continued my quest to understand the indescribable world of economics. It deconstructs the years and reasons for the Great Financial Crisis in 2008. You know, that thing that is often mentioned and everyone pretends they know what it meant and just talks about how bad it was — because if we truly understood how it happened, one would assume we would have learned from it.
Well, it depicts the reason for it in big American banks giving out unreasonable amounts of loans and mortgages (which are basically loans for properties where the bank technically owns the property if you don’t make your payments) to basically anybody, even when they knew the people couldn’t afford it. This led to a boom in the housing market — everyone could get one, so the houses available got more expensive as demand went up.
But as I thought about in my past Weekly Thoughts, it was based on nonexistent value made up and transferred from one side to the other, suddenly making it worth more. And because that wasn’t enough, they put all these ongoing mortgages into a bond — basically a bet that everyone would pay their mortgage. That bet was made into a cake that anyone could have a piece of.
You could ask yourself: why would anyone want a piece of a cake made out of shit? Great advertisement, I tell you. Done by rating agencies that predict the “safety” of a bet. Here comes the crookedness — they were more or less paid by the banks to give them an A+ on safety, even though they would have deserved an F.
Capitalism of the finest sort: betting on nonexistent value and crooking the bet with the money you made out of it.
On the base level, a “bubble” in the housing market was created; the value was rated higher than it actually was — and that bubble popped. Leaving the housing market crashed, people homeless and jobless. The people that blew the bubble up? Got saved by the government, because the government depends on a working banking system — because otherwise there is no US dollar, and without the US dollar, there is no government.
Why did it affect the whole world? Because, if you remember from my past thoughts, the dollar is used for international trade and state reserves around the globe — if the dollar fails, everyone fails. Can’t have that.
So we quickly cleaned the rubble and continued right where we stopped. With the only consequence taken from it being: maybe money shouldn’t be made out of thin air just because you can — or at least only to an extent. Europe set that extent to 5% of the economic value of one country.
So you see, state debt wasn’t even tied anymore to some reserve with value (even if that value was described in dollars), but to the value that can be created by shifting it around — aka economic value, aka GDP (Gross Domestic Product). So the more shifting around a country has, the more it can spend — @economics, don’t kill me for that simplification.
Well, let’s get the ball rolling.
Combined with the learning from my current book by Ray Dalio (a huge fund manager — you know, those who make money out of fortune telling), which describes the history of mankind as being made up of debt cycles — multiple small ones and every 80–100 years a big one — these things make me go crazy.
What’s the difference between a big crisis and a small one? Well, he says it’s the ability of central banks to turn them around — whether pumping out more money or less money has an effect. The cycle moves from money being backed by gold or other solid forms, to not being backed by anything, to being backed by gold again.
And then you look out into the world today and see the skyrocketing of gold prices — not only because more and more individuals are buying it, but because states are buying it. Because the erratic Trump got exactly what he wanted: distrust in the dollar holding up the liberal economic world. So more and more banks are exchanging their dollar reserves into hard gold.
Why would Trump want that? Because it makes American products and workers more affordable to buy internationally — you know, America first and fuck everyone else. The problem with that Wall Street thinking is that states and economies don’t like a stormy sea.
A storm expanded by the rise of AI, led by even more erratic new kinds of Wall Street guys — the tech giants who want to make up for their social dissociation growing up as the “crazy ones” by filling their pockets with the fear of others and shaping the world they never felt part of.
The banks of 2008 have been replaced by tech companies, while the fortune-telling system stayed the same. The scale is once again too big to fail, so the institutions and systems put into place by people are once again not acting in their favor.
Economics is again on the forefront of interest — what a surprise. The disruption this will create in the world is evident in the cloud of predictions in newspapers, but also in the cluelessness of what it will actually mean.
The question now is: if it’s so evident to us that the change is not going to happen in our favor, why don’t we change direction? Well, I got into that answer in last week’s thought — because we can’t agree on a point we want to change.
Control, fear, and simple answers
At that point of the spiral, I reached an understanding of rising nationalism, traditional views, hate, and disagreements. Because it makes the cloud of confusion about what is wrong in our world materialize into a subject you can pinpoint. You have found your point.
The people leaning towards these views have not reached that point because they don’t look at the world — they just went a different path and had a different starting point than me. They come from a position of trying to show us the problems of our world and, with that, their solution — their point, their story.
And I write this from absolutely no position of condescension — I get it. But I deeply think it’s the wrong point. In those positions, the frame for “crazy” and the problems is simply too narrow; the problems and solutions are simply not the whole picture.
But with saying that, I do not think purely economic explanations are enough. Because why else have we not changed the problems yet? Well, technically the capitalist explanation would be: because even in crisis, money grows — only the scales shift, meaning the rich get richer and the poor get poorer.
The scientist David Harvey described this as “fixes of capitalism”: even in crisis, where Marxist theory would see potential for an overthrow of the capitalist system exploiting people, capitalism finds spaces to expand instead of ceasing to exist.
And why? Because what Marx ignored is our human disadvantage of distrust toward anyone who doesn’t resemble us — based on whatever characteristics we define as resemblance. In history, pure economic status, which Marx saw as the only relevant categorization, has never been enough.
If capitalism is failing, it was never the capitalist’s fault — it was immigrants, other religions, other ethnicities, or anything else we found a category for. Because how do you pinpoint capitalism as the manifestation of our human condition of selfishness, the need for superiority and control?
And those conditions are not only found in the capitalist, but also in the proletariat (the working class, the “normal” people). Only the sphere they apply to is different. Where the capitalist applies them to their company, the money they manage, or the political power they hold, the proletariat applies them to how they want to spend their free time, set their values, and form their political views.
Because what else than holding onto control — that doesn’t exist — is clinging to nationalism in times of crisis? It’s the control the proletariat holds over their own life — minimized to their free time, of which they have very little — that they don’t want to spend on things that feel out of their control.
So the evident problems in front of them need to have solutions that are reachable. If there is a party that gives them the vocabulary to articulate this, even better. Ethnicity, nationality, migration status, and national economy are evident and visible.
The cracks and complexity of global capitalism — of which migration is a side effect, based on unresolved problems from the colonial era, which, guess what, was an economic idea — are not so easy to pinpoint.
And maybe that’s why the overturn Marx envisioned never happens (and I don’t mean national communism), and therefore giving up on control will never happen. We would rather shift our realizations of the past from left to right in a circle until we forget the learning altogether. Take generational memory loss into account, and learning narrows down even more.
Other things I learned this week and had no headspace to expand on:
How the idea of nation states is actually very new.
How the question of ethnicity is never analyzed because the potential for radical views is too big.
And how what right-wing parties base their thoughts on is no base at all.