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Good stuff Adam. However, you and Mr. Raghuram Rajan are not the first ones to make this argument; Robert Reich, the former US Secretary of Labor whom you interviewed to great effect in the Century of the Self, has been taking a similar line for a long while on his blog. Here's a particular entry in the blog that lays out the main argument, but it's worth reading everything else he has written on there for his greta intellectual insights:



Basically, as Americans have become poorer, with the median wage dropping while a huge percentage of income goes to the 1% of affluent earners, they've had to borrow more and more just to be able to have an average standard of life. This led to the huge housing bubble which, coupled with the reckless gambling of the financial elite, led to the mess we're still mired in.

A fascinating historical insight ... but quite alarming ... I think that this is evidence of a conspiracy against millions and millions of ordinary British people

It's shocking!

From: "The Economic Consequences of Peace; 1919"
John Maynard Keynes wrote:

"Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become 'profiteers,' who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery. Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."

I'm afraid most people are hopeless with money, most people don't check their bank statements, and most people think that if you borrow £1000 and pay £100 per month for 12 months, then they will have been paid back with 20% interest.

I'm sorry, you can analyse it any way you want, but as my Dad used to say to me, over and over again, "a fool and his money are soon parted".

"if you borrow £1000 and pay £100 per month for 12 months, then they will have been paid back with 20% interest."
Educate me, because I am one of 'most people', I suppose, in that I don't quite follow. A £200 profit on a 1 year loan of £1000 is indeed 20% interest (the price paid for the loan).
Why would that be something which someone that is hopeless with money would think?

Is the error not factoring in things like the time cost of money, inflation, etc?

As always, very intesting but I'm not sure I agree with everything that's been said on here so far.

1. Surely if the governments had been facing "growing protests and dissatisfaction with this inequality" which you characterise as the motivation force behind the market deregulation that occured, then to "give up" as you put it wouldn't have been to adopt a more laissez-faire economic approach would it? It would actually have been to "reform society" which you say they rejected in favour of removing restrictions. I'd agree that the former is more difficult, but if the factors you suggest, like the growing unrest at inequality, were behind the pressures of the time, then deregulation would not have satisfied these the public would they? Could they really be bought off? I think what's being levelled at the public in that case is that they allowed their greed to overcome their principles, and cheap credit sated their desire for money, in which case it was never about inequality really.

2. It's important that Reich says that people "needed" to borrow to supplement their purchasing power. Now without getting into the difference between needs and wants, people wanted a certain quality of life, and the wider themes of Adam's work about the rise of individualism, and it's expression through consumerism seems to be in play here. I think it's fairer to frame the changes in terms of these trends post-war, and I think that's what Adam's done before particularly in Century and Kiss - is this a change in opinion? The reason I ask is I don't see that 79/80 were sudden points of particular social readiness for Thatcher and Reagan. The economic upheavals of the 70s and earlier in the public mind, and the intellectual battle against Keysianism culminated in the government of this area being elected.

3. I love the Keynes quote. But didn't Keysianism introduce defcit spending in the biggest way in Western economies post-1929?

4. I think there's an extent to which I think this contradicts the story in The Trap, and also in Pandora's Box, about (and I'm grossly simplifying) misapplication of natural science principles, the idea that quantitive theories are absolute and all things are reducable, the rise of positivism, all that stuff.

I've run of time, I'll be back.

@Phil

My apologies Phil, my email seems a bit sharp to me now! People have my sympathy because banks know a lot more about money than we do and it's an unequal fight.

You are paying more than 20% p/a because after your first repayment, you will be borrowing less than £1000. You would pay at a rate of 20% only if you pay £1200 in one repayment on 31 Dec . To work out the real interest rate, you need to take the interest - £200 - and divide it by the reducing amount borrowed. (Not an easy sum to do, by the way).

Nowadays, lenders are mostly required by law to quote APR (annualised percentage rate). If this loan were quoted at 20% APR, your monthly repayment will be less than £100 per month, and you will save yourself approximately half the interest charge.

As you put, there are other calculations to be made if you want to find out the real cost/benefit of the loan - the value of the asset you buy, inflation and opportunity cost are the main ones.

None of this is easy to work out but most people don't try. Some basic financial education in the classroom could be of great value.

I think this is also due to the rise of people owning collatoral - you cannot lend without (at least the pretence of) this, and since the renaissance, private ownership has been increasing steadily, as has the broader power of the banks. Thatcher certainly encouraged greater public ownership of property, by hook or by crook, partly for this reason I imagine. Her opening-up of the stock market also increased the size of the market the financial services could exploit.

You say that, thirty years ago going into debt was viewed as wrong, but as you can see from your films, there was one exception to this - the aristocracy/those running the country. They can juggle debt, and if it works, they are lionised; if they fail, they are fed to the lions. Either way, it's entertainment (see your previous piece on the Goldsmiths). People want to have what those above them have, a carefree aristocratic life, and it it seems to me that the last 30 years have been largely about making this available, at a price, to people (the growth of technology helping this), with there being a concomitant easing of the fear of debt. After all, we now have a welfare state, and no poorhouses, so people don't have to worry so much about falling.

As a final view, I think that Gordon Brown was so keen to increase the amount of financial-services activity because he understands and enjoys that way of thinking and life, and so enjoyed everyone being involved in the ins and outs of it. In the valley of the financially-blind, the one-eyed man was king. Just the latest in a long line.

Fascinating stuff as ever.

May I also point people to the interesting work of Elizabeth Warren (now TARP congressional oversight committee chair). Follows on from the issues raised by the last video in this blog post.

Lecture: The Coming Collapse of the Middle Class (2007)

Runtime = 60mins [and worth it!]

Warren's focus on 'the family income' (1970s vs 2000s) and debt is fascinating and her outlook is extremely valuable to this topic.

Many of my assumptions were challenged - in as much as I didn't realise it could be that bad!!!

I have often mulled this thought in my mind of credit debt as my grandmother who lived through the great depression, though at the time working for a wage in addition to my grandfather, said the family went through unaffected. She has always said it was because they never spent what they did not have; a mantra she still follows to this day.

This shift of open credit for me is interesting as it sets out a frame work for something more related to the human psychological necessity to organize social relations by hierarchy. Where we move away from actual labour and money having value by a universal gold standard now capital has become synonymous with our potential 'human capital' or perceived value of self relative to our financial/societal system's bottom line. A position such as this pits us in complete competition against all others, including family and friends, around us in such a way outlined by Adam in The Trap that we become paranoid as we begin to interpret the world and our relations as calculated strategies and therefore falling on ideals such a Game Theory to assist with navigating our daily lives.

To not think this way would literally leave one vulnerable bringing the essence of such theories to fruition.

Adam, you absolutely must read Michael Rowbotham's excellent 'The Grip of Death'.

It is a thorough analysis of how money is created in the UK but now applicable to the world and answers why so many things fail to make sense in our society.

Only 3% of money is created through the UK government, ie notes and coins. The rest is created as debt through banks. It is not based on value but on debt. Mortgages are responsible for the majority (66%) of the UK's money stock. There is no reason why a country/government cannot create all of its money needed and never have to pay that back to a private organisation. All our taxes go back into directly paying off debts for the money borrowed into existence by the banks.

Day after day we read headlines of all public services 'not have enough money'. The idea is simply preposterous.

There is an excellent short introduction into the subject of Money as Debt by Canadian Paul Gringon.



'The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of slight of hand the was ever invented. Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take away from them the power to create money and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money.'

- Josiah Stamp, Public address central hall, Westminster 1937, former director The Bank of England.

It would be great to see your excellent research into this subject.

Sorry but this is old stuff and I'm surprised so many people are discovering the true cause of this depression now.

By far the biggest problem we face is the politicians. They will never admit it so they swept this problem under the carpet and fool us with the idea that the economy is recovering.

Even if it's recovering, the next crash will be even more painful and so on till the whole system get destroyed and humanity plunges into Dark Ages 2.0

This comment was removed because the moderators found it broke the house rules. Explain.

Dear Mr. Curtis,

I think all financial explanations of the recent events, including Mr. Rajan's, are somewhat superficial, even when these explanations have a "psychological" dimension. I think a much better explanation lies in some deep post-WW2 cultural shifts of western societies. The financial events are the result, not the cause.

First, a distinction: I think the term "western governments" is too generic. I think what you mean by this term is "anglo-american" governments" (ie, UK, US, Australia etc). The trajectories of some other western governments (Germany is the prime example) are quite different from these.

In my opinion, the most obvious difference between the Anglo-Americans and Germans is, the first willingly dumped its industry, while the other kept it. And I think more than anything else this was a Psychological decision. US-UK part of this story is partially touched in some of your documentaries, especially the "Mayfair Set".

I went as a Ph.D. candidate in engineering to US in 1993. For me, the guy from a third world country, US was the country of firsts: Airplane, transistor, plastics, travel to moon, PCs, microprocessors, you name it. But I immediately became aware that Americans are no longer excited by technology anymore. Approximately %70 of M. Sc and Ph. D. students in engineering were foreigners, especially Chinese and Indians, but also Turks like me. Most older engineering professors were Americans, but they were increasingly replaced by younger foreigners. It seemed US was no longer sufficient to itself in terms of engineering talent.

Then I've learned that US had a current account deficit. This really blew me of. How could such an advanced country have a deficit in international trade?

Then I have noticed that the upstate NY town I was living in was like an industrial graveyard. Apparently, it was very active until 1970's but then it suddenly collapsed. There was a lot of deserted factories around with broken glass and locked doors. This incident was so recent that most townspeople can point to the factory buildings in which they once worked. But when pressed to give reasons for the change, they only gave very superficial, single sentence reasons.

Then I noticed that this was a set pattern for the whole north-east US. Mainly the steel industry, but also a lot of other industries, folded in early 80's.

I have tried to find books about the causes of this massive social event. What I managed to find was pitiful. At that time there was the Titanic craze, and bookshelves were groaning under Titanic books. In contrast, there was virtually nothing about the sinking of US industry. Apparently the whole thing went down unmourned, and much less noticed than Titanic. No author find it interesting enough to collect thousands of small narratives and fuse it into a coherent, unified story which analysed the reasons. I still find this disinterest as the most interesting part of the story.

When industry is gone, a way of thinking, a culture and a whole psychology goes together with it. If you want to understand what I'm talking about, just look at the pages of an issue of scientific american magazine from 19th century. There you will see the pride of the yankee inventor. What is gone is this. And no conspiracy theory there, they killed it themselves, consciously or unconsciously. At one point they thought it so worthless that they dumped it to china. I regard this as the most stupid incident of their history.

Culprit? I strongly feel some of it is related to 60's counterculture. But the collapse of US industry is as mysterious as its birth. At least, for me. What is certain is that US passed a point of "revaluation of all values" in early 70's and they decided they didnt want their industrial heritage anymore. And with typical american single-mindedness, they jettisoned their industry in one generation, which took their ancestors centuries to create. Without giving it a second thought.

One may say that still all new things still come from US. . For example, a whole new world of virtual reality (3d computer games, animated movies etc) just came into existence ex nihilo in 1980-90's. But I believe most of this is the inertia of a huge and once a very fast ship, whose engines are not working anymore. This inertia is still immense and very respectable. But it is inertia.

Why %58 of the new wealth went to top %1? Because in the new economic system the bottom %99 is not needed anymore. But this, like all economic results, is a consequence. American society of today is a non-producing society. No production, no wages to the bottom %99. If you dont count turning meatballs in McDonalds, that is.

I think the Germans and the Japanese at the end of WW2 were in much better shape. Yes, they also had no production, but they had the culture of production. Hence they very quickly created a very sophisticated industry within 10 years. Unfortunately what americans willingly forgot is exactly this culture.

I guess American ruling elites are quickly waking up to this fact. The invasion of Iraq and the struggle to control oil areas are partly a result of this wake up.

"One may say that still all new things still come from US. For example, a whole new world of virtual reality (3d computer games, animated movies etc) just came into existence ex nihilo in 1980-90's. But I believe most of this is the inertia of a huge and once a very fast ship, whose engines are not working anymore. This inertia is still immense and very respectable. But it is inertia".

Mehemetsahhaf's observation brings to mind an episode I saw recently of the brilliant Ö÷²¥´óÐã series "Ascent of Man" which examined the Industrial Revolution and why it took off in Britain ahead of continental Europe in the C18th.

While Britain's great minds were improving and adapting the steam engine, French inventors were building dolls to entertain the aristocracy. They could write, draw pictures and imitate human facial expressions. They were incredibly intricate works of automation, but ultimately still toys with little intrinsic worth beyond entertainment - the ipods of their time.

Meanwhile back in the present, China has employed 10,000 R&D scientists and engineers for the development of rail alone. China will lead the world in the development of Green technology - scientists and engineers again. People who actually makes things. There's a novel thought.

#15 Mehmetsahhaf

I find your comments and observations very interesting as the industrial decline of the US/UK is something I too have struggled to make sense of. As someone who works in what was once considered a vital part of british engineering I could not understand the way, manner and speed that it has been destroyed and for what purpose?

My thoughts may be way off track…but I think it's to do with our version of capitalism being exploitative at its roots. British history is full of stories of the exploitation of its own working class and if it wasn't for the great Quaker families of the past that did at least treat their workers with some respect then the whole story would be a lot worse than it is. The USA with its lack of a large pool of working class to exploit went even further and resorted to the most inhumane treatment of workers by the use of forced exiled slave labour. From exploitation and with great sacrifice, through wars that were fought for the common good of all and from massive struggle over generations did eventually appear to grow a mutually beneficial society.

Globalisation and the free market is nothing new (it could be argued that these were the very same forces that created slavery in the first place) but without rules and regulation globalisation and the free market can and will be forces of destruction.

The US & UK have outsourced the productive parts of their economy as it has allowed them both to resort back to the type of exploitative capitalism that they used to practise, in doing so they have been able to cut the ties with their own working class and profit financially from it in the short term. In doing this they have broken a mutually beneficial financial cycle and replaced it with a one way system that could lead to the financial ruin of both countries

When you hear a figure given about the trade deficit the US has with China you have to ask yourself what’s the true value of that figure to the US economy! This figure will be priced in the new lower cost Chinese labour the corporations now employ the real loss to the US economy compared to when these goods were produced in the USA is obviously far greater.

For those that STILL wonder about the the industrial decline, this short video might help -

Dear Adam,

I read this post last night and over coffee this morning saw a report from California about the little people given cheap (so it seemed at the time) credit.

Here's a summary, "The picture that emerges from this foreclosure study is of a generation of Hispanic homeowners, typically refinancing an existing, modest home, rather than buying an extravagant McMansion, losing years of accumulated wealth and savings in the process."

"Fewer than half of mortgages in foreclosure were purchase loans. Thus, the typical foreclosure story is not a family reaching too far in order to buy an unaffordable house, but more likely, of using home equity to pay credit card debt and maintain a middle-class standard of living in the face of stagnating incomes. Essentially half of all foreclosures in California involve Hispanics, roughly in the same proportion that subprime mortgages were given out in the years prior to the crisis. Thus, the last to arrive at the bottom rungs of the middle class ladder are the first to be pushed back off."

It seems like predatory credit was extended to many Hispanic & Black Americans. (Not just in mortgages, look at where the evil payday lenders are located).

Was this to control parts of American society that were not going to be part of Rajan's top 1%?

Here's the report if anyone is interested in the report I mentioned, it can be found here:

"Dreams Deferred: Impacts and Characteristics of the California Foreclosure Crisis" California's Center for Responsible Lending

I think the increase in debt-based economics is a complex affair, but the current status of our banking systems had a great deal to do with the rise of statism. The entire centrally-backed Fractional Reserve System is an unrelenting fraud, which groups of economic PhD apologists continue to justify with idiotic arguments that talk about how economic bubbles create innovations (instead of follow them) or other insane talk about increasing aggregate demand (consumption over investment) by taking from the pockets of one sector and putting it into the pockets of another. Some talk about magical multipliers that make materialistic consumption the ultimate virtue. Macroeconomics is utter nonsense and a smokescreen for exploitative monopolistic privileges for bankers to print money and earn interest on it. And central banks can't set the interest rate (price of credit) any more than the planners in Russia could plan the price of bread. The institution of the Federal Reserve System in 1913 in the US greatly enhanced a domestic debt-based money system.

Regular people are very much to blame with their buying habits, but the availability of easy money (which creates cycles and malinvestments besides debt slavery) is a result of basic fraud. Teaser rates in the current housing bubble couldn't come about without artificially low interest rates, which suckered people into investments that were unaffordable. But let's not forget "Generation Zero"'s role in this. A generation of narcissists didn't help.

The US is totally addicted to debt. Since the end of the balance of trade system under the Bretton Woods system, we have had a money printing competition to peg currency valuations. Since Nixon went off the international gold standard in 1971, except in 1973, we have had a large trade deficit that continues to accumulate (about $7 trillion). Nixon's talk about defending the dollar is hilarious given that he basically did the opposite.

Nations like China just print even more to keep its currency relatively weaker. Seeing the value of the dollar in terms of gold reveals the statist policies of monetary inflationism, which allows the expansion of government without direct taxation. When speculators saw that the government welfare-warfare system was getting too large, the government simply changed the rules of the game. Now government is over 40% of GDP (and more like 45% if you count everything) and it bails out multinationals as a public service. In the process, we have simply printed money to pay for imports (helped by China's deliberate mercantilist policies) and racked up huge debts to many foreign nations. Of course, this money flows back into the U.S. and creates bubbles in addition to contribution made by domestic money creation.

Everything is debt-based consumption in the U.S., and it is probably similar in Britain. George Carlin called consumption the only lasting American value.

In your research, please look into the following sources:



Z.1 Flow of Funds (Total Outstanding US Debt Numbers from the Federal Reserve)
[Unsuitable/Broken URL removed by Moderator]

Debt Clock


Peter Schiff was right 2006-2007 - CNBC edition


Trade Data Since the 1960s


Nixon Ending the Bretton Woods System


Economics Talk by Thomas E Woods at University of Colorado, Boulder


Money, Bank Credit, and Economic Cycles by Professor Jesús Huerta de Soto
[Unsuitable/Broken URL removed by Moderator]

Gold and Economic Freedom by Alan Greenspan


Money as Debt I - Documentary by Paul Grignon


Money as Debt II - Promises Unleashed


Generation Zero (Documentary)


The Importance of Capital Theory by Robert P. Murphy


Maybe read a little Christopher Lasch too.

One of the things that led to people not wanting to borrow money in the *old* days was their independence. The notion that they owed nothing to anybody.
Naturally, once you have a mortgage it seems rather silly not to borrow the relatively small pittances that allow you to furnish the house nicely. You are in debt for the rest of your life but, strangely that life can be much more enjoyable than the one where you saved and saved....... and then died before you got the chance to enjoy any reward of all that work. It's a funny old world... But as inherited wealth from property percolates down the generations, there may be a readjustment.

This comment was removed because the moderators found it broke the house rules. Explain.

Im shocked that more people are not educated in this subject and specifically the political and real world battles in history for control over money creation.

We came close to Government created money...

'Money is the creature of law, and the creation of the original issue of money should be maintained as the exclusive monopoly of national government. Money possesses no value to the state other than that given to it by circulation Capital has its proper place and is entitled to every protection. The wages of men should be recognized in the structure of and in the social order as more important than the wages of money.

No duty is more imperative for the government than the duty it owes the people to furnish them with a sound and uniform currency, and of regulating the circulation of the medium of exchange so that labour will be protected from a vicious currency [private bank-created, interest-bearing debt], and commerce will be facilitated by cheap and safe exchanges.

The available supply of gold and silver being wholly inadequate to permit the issuance of coins of intrinsic value or paper currency convertible into coin in the volume required to serve the needs of the People, some other basis for the issue of currency must be developed, and some means other than that of convertibility into coin must be developed to prevent undue fluctuation in the value of paper currency or any other substitute for money of intrinsic value that may come into use.

The monetary needs of increasing numbers of people advancing towards higher standards of living can and should be met by the government. Such needs can be met by the issue of national currency and credit through the operation of a national banking system. The circulation of a medium of exchange issued and backed by the government can be properly regulated and redundancy of issue avoided by withdrawing from circulation such amounts as may be necessary by taxation, re-deposit and otherwise. Government has the power to regulate the currency and credit of the nation.

Government should stand behind its currency and credit and the bank deposits of the nation. No individual should suffer a loss of money through depreciation or inflated currency or Bank bankruptcy.

Government, possessing the power to create and issue currency and credit as money and enjoying the right to withdraw both currency and credit from circulation by taxation and otherwise, need not and should not borrow capital at interest as a means of financing government work and public enterprise. The government should create issue and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers. The privilege of creating and issuing money is not only the supreme prerogative of government, but it is the government's greatest creative opportunity.

By the adoption of these principles, the long-felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts, and exchanges. The financing of all public enterprises, the maintenance of stable government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own government. Money will cease to be the master and become the servant of humanity. Democracy will rise superior to the money power.'

Abraham Lincoln, Senate document 23, Page 91. 1865.

He was assassinated 3 weeks later.

Reply to corymd:

The trouble with some of what you argue (and your reading list) is that it implies the solutions to the problem of a debt-driven economy is a libertarian/monetarist economy. The unfettered market with a stable money supply (and zero inflation?) may prevent some credit-driven bubbles but it does nothing to prevent the private sector from engaging in hyper-speculation and exploitation on its own and it says nothing helpful (IMO) about how to turn around a declining economy. Futhermore, stimulating aggregate demand IS beneficial when it is coupled with a plan to create positive and *useful* investments -- the kinds of things libertarian critics too often reject out of hand as wasteful public spending (such as public schools, parks, bridges). It's when stimulus spending is just pushing demand without a purpose that it looks like just another form of borrowed time.

Endless desires and the debt that serves them isn't a problem if you are producing real goods and have the prospect of an endlessly growing economy. The trouble is that the economy may not be limitless and that debt and finance profit has *replaced* rising incomes to fund our rising standard of living, an expected result from an economy that has been liquidating productive domestic jobs for the last 50 years. So what to do? if the economy cannot grow endlessly (or always every year), how do we address this socially and politically. Is a huge social and economic "correction" the panacea?

The trouble isn't the lack of market incentives and it isn't the money supply, it's the lack of production of real goods and, ultimately, of uncontrolled inequality.

And as for exhorting us to read Lasch, I can only say YES! Being the lover of the free market that he was(nt).

Wasn't Karl Marx the first to describe this with his 'theory of surplus value'? Say you had a group of capitalists and a group of workers. The capitalists pay the workers wages to make products that they then sell at a profit. If however, the workers are the ones buying the products, then how can they afford to buy them at a price higher than the wages they are paid? Marx posited that capitalist countries were constantly engaged in acts of imperialism in order to obtain new markets and cheaper workers, but a temporary solution could also be implemented where the capitalists lent money to the workers in order that the latter could buy back the products they made. Sooner or later though, the interest payments on those loans would mount up to the extent that the workers were unable to both pay the interest and buy the products. Result: a credit crunch.

What Ben SJ Wilson said, and thanks for saving me the trouble. The falling real value of incomes that can only be ameliorated (and only temporarily) by consumer debt is, in Marxist terms, a direct result of companies trying to pay as little as possible or, in other words, drive up the surplus value of labour. Credit crunches are the Marxist crisis of capital. I can't really see any flaws in this explanation, but I'd be interested if anyone can.