Why are there constant financial crises?
The stability of the money system depends on belief in future profits and economic growth. The system of credit is a belief system (from the Latin credere = to believe). Credit is the belief in the ability of the borrower to pay back the borrowed money plus interest. Loans include interest repayments. This kind of money system forms the basis of capitalism: capital must yield a profit. The economy must always grow. Crises in the capitalist money and economic system are crises of belief. They occur when there is ‘too little’ growth, not ‘too much’. ‘Too little’ means the original calculations for growth and profit on issuance of the loan turn out to be exaggerated or the belief in them (for whatever reason) dissolves and the expectation of growth is revised downwards.read more