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Central bank vendor financing

(Source: https://threader.app/thread/1232171665502752769)

Globalization has become a sophisticated and central bank enabled form of vendor financing. Countries import goods they have no means to pay for except debt.+++(4)+++ Result? Countries like Sri Lanka in a serious debt trap. There is no alternative to building skills and know-how.Academic economists see that debt fueled consumption and mistake it for prosperity. The unemployment that arises from a population not having the skills and know-how to produce the very goods we consume with debt is seen as a separate problem. They are the same problem. As countries drown under debt, even the countries that vendor financed on a large scale face a severe crisis.

Solution? We have to spread the skills, know-how and the formal knowledge to produce (in that order) far and wide so poulations can help themselves. Capitalism cannot work under a regime of unlimited central bank enabled vendor financing, which how I describe globalization. The toxin of debt accumulates in the system and eventually overwhelms it.+++(5)+++ Market fundamentalists ignore the central banks and preach free markets.

I have always told our engineers “if something is too expensive for us to buy, it is a signal we must develop the know-how to make it”.+++(4)+++ That’s a natural market signal - the message “we can’t afford it”. Central Bank assisted vendor financing destroys that signal and distorts incentives to acquire the know-how to help ourselves.+++(5)+++ The widespread cultural message is “if we can’t afford it, we can borrow to afford it!” - even as our own sons and daughters go unemployed. There is no durable prosperity in that path.