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Why Do Credit Crunches Keep Crushing The Little People? | The Exchange | Real Vision™

1,260 views · Published 22 August 2018 · 2:22 · Indexed 28 October 2026

Channel: Real Vision Presents · 2018 · News & Politics

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Does prolonged misallocation eventually distort the moral and social fiber of political systems? In this third and final installment of their “Exchange” series, Grant Williams, Simon Mikhailovich and Dan Oliver tackle this controversial but compelling topic, drawing on historical anecdotes to make some uncomfortable comparisons with past periods of profligacy and excess. 

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Why Do Credit Crunches Keep Crushing The Little People? | The Exchange | Real Vision™
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Transcript:
I want to go back to your question about why it happens over and over again. And I think, again, looking back at history, there's some good lessons we can draw. The very first, as I mentioned earlier, credit collapse that history records in detail is the Athenian credit collapse of 594 BC that Aristotle talks about, other people. What happened there I think is very instructive for us. And that is imagine, hypothetically, an economy with 100 drachmas. And the Nobles have them all. That's why they're the Nobles. And they lend them to the peasants at 10% interest. A year later, the peasants owe the Nobles 110 drachmas. Where do the 10 come from to pay the interest? Before the coin arrived in Athens, it would be grain loans. So you'd lend people actually things that produce of themselves. I give you seeds, and then you plant them and you get more back. And so interest wasn't a problem. But you can't pay interest with coins. And this is why Aristotle said that usury, the taking of interest on money, was contrary to nature because the coins could not themselves reproduce, self-reproduce. Now, if you talk about usury in the prohibition, you're considered an economic primitive in a sort of way in the Middle Ages. But I have not yet seen the simple arithmetic of how the peasants can pay back the 110 when there are only 100 in the economy. The modern answer to this problem, remember, is to print up the extra 10. That's what the Fed does. If the people owe the banks more than they have, they print the money up and give it to the banks, which makes no sense to the people who owe the money. And this is why there is QE for the people in this sort of proposal, which, again, has a logic to it, which is that the little people, the middle class, is head over heels in debt to the oligarchs, the people who live in New York, ultimately. And again, it's not just Athens. It's not just here. But Caesar came to power promising to get rid of interest payments. Robespierre talked about it. So when you look at the rise of great populist movements, whether it's Italy with Mussolini, or in this country, or in antiquity, it usually centers around the great credit collapse, where the little people are sunk under their debts, they can't pay their debts, and some strongman arrives and says, I will bail you out.

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