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Lending money to people who obviously can't afford to pay it back, and issuing debts to people who obviously can't afford it, is creating an economic crisis; Lending money to most people who obviously can't afford to pay it back, and giving it to most people who obviously can't afford it, is creating the Great Depression.
The essence of the economic crisis is that the economic structure of the whole society is out of balance, especially the imbalance in the industrial structure and the unreasonable distribution of wealth, resulting in insufficient demand and overcapacity, which Marx demonstrated more than a hundred years ago.
The distribution of wealth in capitalism is mainly distributed according to the means of production, and over time it will naturally accumulate huge useless production capacity and the gap between the rich and the poor, which need to be digested through the economic crisis and let the market restore demand and order.
Therefore, if you take the capitalist road, there will inevitably be an economic crisis, and there must be an economic crisis, otherwise the market will always produce products that no one will ever buy.
As early as the beginning of capitalism in the nineteenth century, a large or small economic crisis broke out every few years, but at that time, most of the production and debt were in the hands of capitalists and adventurers, and they were willing to bear the corresponding high risks for high returns, so even if an economic crisis broke out at that time, they would bear it, and it had little to do with ordinary people.
Borrowing and investing are very serious and risky things that need to be approached with caution. So when we go to take out loans or buy stocks, in theory, banks and securities companies will conduct strict risk assessments on us, and will select the scope of risk for us according to our own resources and capabilities.
In this way, even if we cannot repay the loan for some reason, the bank can bear the corresponding loss; Similarly, even if we lose money on the stock we buy, we can bear those losses.
Because the losses are within the controllable risk range, even if the investment fails, it will not affect our normal operation and life, and the overall economy can maintain healthy operation.
But there are some people who, for the sake of profit, wantonly break the rules, lend money to people who obviously cannot afford to pay back, and issue debts to people who obviously cannot afford to lose, resulting in the disorderly expansion of the capital market and the consequent disorderly increase in money and production capacity. In the end, huge production capacity and the gap between the rich and the poor accumulated, causing an economic crisis.
With the outbreak of the First World War of the last century, the nearly century-long Vienna system, dominated by the British Empire, completely collapsed.
Countries on the brink of war issued national debt to maintain excess industrial capacity for the sake of their own homeland security and national strength, most notably Nazi Germany and the United States during Roosevelt's New Deal.
Until the end of World War II, most of the wealth accumulated before the war was reduced to ashes. Later, with the signing of the agreement between the Big Three in Yalta, the world order was re-established and the market restored.
After World War II, the United States dominated the Western capitalist world, engaged in affirmative action and welfare at home, engaged in economic hegemony abroad, interfered in the internal affairs of other countries, and accumulated a large amount of debt.
So the dollar was abolished and the dollar was issued on national credit, which was the collapse of the famous Bretton Woods system.
Since then, the United States has issued out of control, issuing debt to the newly wealthy middle class, and dragging down the Soviet Union with a huge national power supported by sky-high dollars.
Since then, the United States has become the only superpower in the world, and American politicians, who have no external threat, in order to curry favor with the bottom voters, have united capitalists to issue bonds to the poor, and claimed to make every American able to live in a big house.
In 2008, when Americans were cheering that even strippers could borrow money to buy three big houses, a global economic crisis that had accumulated for more than half a century finally broke out. Countless Americans moved out of their mansions and set up tents in the streets, and most of the world's countries were also in economic crisis.
But at that time, the United States, with its military all over the world, developed financial system and scientific and technological advantages, strongly interfered in trade and scientific and technological exchanges between other countries, and exported dollars to the world.
At that time, the mainland economy had just taken off, and under the influence of the economic crisis, countless factories were facing bankruptcy and closure, and a large number of migrant workers were about to lose their jobs, and they were in urgent need of financial and technical support.
So under the difficult choice, he chose to introduce the US dollar, carry out a large water release of four trillion, and began a vigorous infrastructure construction.
This release of water also allowed most of the middle class to take loans to buy houses, resulting in a direct doubling of house prices, which naturally doubled the dollar introduced by the sky.
And the United States crossed the river to tear down bridges after making money, ended quantitative easing, and recycled dollars, causing a large-scale flight of funds when the mainland was inexperienced. These escaped funds returned to the United States to pay off some of the debt, but left the mainland with a large amount of production capacity and debt.
Therefore, in 2015, the State Council proposed supply-side reform and introduced a three-to-one reduction and one-supplement policy, that is, to reduce production capacity, leverage, inventory, reduce costs and make up for shortcomings.
That year, I saw that many zombie enterprises were about to close their doors, but due to years of urbanization, too many people in the mainland had left the countryside at that time, and were accustomed to production and life around urbanization, and it was difficult to return to the original state of life.
So after another difficult decision, the state introduced monetization shed reform, raising prices to destock. This also makes those zombie companies that are about to close their doors revival and fail to de-capacity.
Everyone knows what happened later, the price increase went to inventory, not only the inventory did not go, but also the production capacity that had just gone back to rise.
And let many of our migrant worker brothers who work in factories feel that money is becoming less and less valuable, and they can't afford to buy a house if they don't buy it, and they have also added leverage and bought a building with debt.
Since then, like the United States before the subprime mortgage crisis, most of us have been heavily indebted, so this economic crisis is inevitable, but sooner or later.
Not only the mainland, but also the United States after World War II successively exported dollars to Latin America, the Philippines and Japan and then cashed them out, leaving a pile of debts that people in those countries could not get up in a debt trap for decades.
Just like speculators in some parts of the mainland run to Hainan and Beihai to flip houses, they change money and run away after speculation, leaving locals with endless debts and endless construction waste.
These speculators and their grandfathers, the greedy financiers of Wall Street, should have gone bankrupt en masse after the 2008 explosion.
But they have repeatedly used their power and means to influence the economic policies of various countries, resurrecting themselves again and again, transferring sky-high debts to the poor people around the world, but they have made a lot of money.
Compared with them, the capitalists who were criticized by Marx a hundred years ago and harshly exploited the working class are simply moral models.
At that time, the capitalists were at least willing to gamble and lose after the investment failed, but now these people, when the investment is lost, they will go to the trouble, make trouble until the bank releases water, the asset appreciates, and when the loss is turned into a profit, they cash out and run, leaving a bunch of useless assets and countless poor people who take over debts.
Debt always has to be repaid, the economic crisis has affected everyone, and countries have issued a lot of debt during this pandemic, and this time the debt is so large that no group can take over.
The U.S. stock market, the Japanese bond market, and the Chinese housing market, the capital and production capacity accumulated by the huge amount of debt have fallen into a liquidity crisis. A few days ago, there was also news in Nanning that the mortgage could reach a hundred years old, but everyone with a discerning eye knew that this was obviously unsustainable.
And the Great Depression, formed by the economic crisis that has accumulated for nearly a century, may also be about to explode.