1. Growth. (Never mind the cost or what kind of growth--all growth is good, even the financial equivalent of aggressive cancer).
2. Borrowing from the future to fund today's keg party, worthless college diploma, particle board bookcase, stock buy-back, etc. (oops, I mean "investment")--a.k.a. which is a polite way of saying this unsavory truth: .
3. Monetary stimulus / financialization. If private investment sags (because there are few attractive investments at today's nosebleed valuations and few attractive investments in a global economy burdened with massive over-production and over-capacity), drop interest rates to zero (or below zero) to "stimulate" new borrowing... for whatever: global carry trades, bat guano derivatives, etc.
That is a mouthful, so let's break it into bite-sized chunks.
In the good old days, home mortgages were safe and dull: banks and savings and loans institutions issued the mortgages and kept the loans on their books, earning a stable return for the 30 years of the mortgage's term.
The first step was to generate entire new types of mortgages with higher profit margins than conventional mortgages. These included no-down payment mortgages (liar loans), no-interest-for-the-first-few-years mortgages, adjustable-rate mortgages, home equity lines of credit, and so on.
This broadening of options (and risks) greatly expanded the pool of people who qualified for a mortgage. In the old days, only those with sterling credit qualified for a home mortgage. In the financialized realm, almost anyone with a pulse could qualify for an exotic mortgage.
The interest rate, risk and profit margins were all much higher for the originators. What's not to like? Defaults trigger losses.
Securitizing mortgages enabled loan originators to skim the origination fees and profits up front and then offload the risk of default and loss onto buyers of the mortgage securities.
Securitization was tailor-made for hiding risk deep inside apparently low-risk pools of mortgages and rigging the tranches to maximize profits for the packagers at the expense of the unwary buyers, who bought high-risk securities under the false premise that they were "safe home mortgages."
which can only expand to dominate an economy if it is supported by a central bank bent on expanding credit--
-- , greatly increasing the odds of a systemic domino reaction in financial meltdowns. This is precisely what we saw in the 2008-09 Global Financial Meltdown (GFM): supposedly "contained" subprime mortgages toppled dominoes left and right, bringing the entire risk-saturated system to its knees.
-- , as those closest to the central bank money/credit spigots can scoop up income-producing assets first at much lower costs than Mom and Pop Main Street investors.
that rewards debt-based speculative gambles by those closest to the cheap-credit spigots.
As I explain in my book , , and the only possible output of financialization is unprecedented wealth and income inequality.
While central bankers are congratulating themselves on their god-like mastery of Nature, and secretly praying to the idols of the Keynesian Cargo Cult every night, of borrowing from the future, the obsession with "growth" at any cost and financialization /monetary stimulus, a.k.a. .
Don't fall for the mainstream media and politicos' shuck-and-jive that all is well and "growth" will return any day now.