Ok finally found a break to watch it. This is an economic critique, not Biblical one...
First to his credit, he bases the model around debt's influence on the economy. This is simply revolutionary in modern economic thought, which basically writes off the affect of debt on the economy. So far as it goes, it is very useful, and with good production value. If you are not familiar with market cycles and economics this is a really good intro.
However he leaves out a a few important things and has some implicit biases that are useful to be aware of.
The affect of supply and demand on rising prices is ignored; attributing price changes to credit and deflation. This isn't always the case and there are places where supply and demand are very important.
He makes it sound like credit is a good thing because it grows the economy. It's not.
In the first place, the need to grow the economy is only an economic necessity because we have interest bearing debt. Interest means the money supply HAS to grow or the debt can't be repaid. Growth is the Holy Grail of economic thought, but that is because it is required for debt based economies to function and it is inflationary, which increases the asset values of the rich.
Second, a lot of spending will happen irregardless of credit. For example: housing, food, travel, etc. All debt does is artificially increase the price of these goods. People who otherwise couldn't buy, and never will be able to so demand shifting is harmful to them, get it. Relatively fixed supply with increased demand means prices must go up. And since the money is 'free' people are willing to pay more and sellers willing to hold out for more.
So what that does is artificially increase the cost of survival for everyone and necessitate everyone goes into debt to get buy, even if they wouldn't have needed it before. This is why our grandfathers could buy a home for cash with a blue collar job and today even white collar workers have no hope of a home purchase without a 30 year loan. Without the ability to mortgage a house, we'd all still live in houses, we'd just be able to pay for them without debt. Now replicate that across the whole economy. Debt begets the need for more debt and everyone working harder than necessary for the benefit not of ourselves or our children but the bankers.
Another thing, he makes it sound like debt is someone giving you a real thing or saved money in exchange for a debt instrument. Its not. Mostly its a banker creating those funds out of thin air with a stroke on the keyboard. No work done nor assets put up. To the extent assets are put up for loans it is via people's bank savings which are then leveraged several orders of magnitude into debt.
He is right about credit creating bubbles and busts but as I point out above, this is all for not. It needn't be that way. All this economic pain and agony is solely so the financial class can siphon off our profits; simply parasitic behavior. Notice, the financial services industry represents around 30% of corporate profits. That is pure cost to the economy. Rent seeking for no tangible benefit. This whole thing, this cycle, is only to the benefit of the bankers, not any of us.
Another thing, he makes it sound like the inflationary cycles are due to the affect of demand shifting on prices. That is somewhat true. But he glosses over the point that credit creation, being money creation, is itself inherently inflationary. Supply and demand and the supply of money has grown while supply of goods has not. Now thats not always true, factories can churn out more products. But for many necessities the supply and available demand is relatively fixed so increasing the money supply can only increase prices.
Now while he is good to focus on credits affect on markets. There are other cycles that don't relate to debt but because increased demand raises prices, which then attracts new producers to the market until the point there is too much supply which then crashes prices. This is caused by a lack of market information, poor planning and poor decisions; classic mania. These still exist without debt but these cycles and bubbles are smaller and slower to build because debt allows more people to get in and faster and in a bigger way and people are more likely to take foolish bets because it feels like free money.
He talks about have and have nots. These credit fueled economic cycles exacerbates the economic disparities. The pareto principle means there will always be disparities, but debt means they are bigger and for the have nots, worse off because they live in an impossible situation of needing debt just to survive and what they do have is worth less.
You will notice first two methods for fixing things he calls bad and deflationary; but not the government buying debt and spending money. This is the standard banker line. It increases the power of bankers over the country. It is essentially the country selling out to the bankers to fix the problem the bankers themselves caused. I would expect nothing less from a Hedge Fund manager because debt restructuring is the one of the four that most directly hurts his bottom line whereas government printing and stimulus buying fatten his pockets.
Thing to remember is that debt restructuring does't mean that the bartender doesn't get paid for his whole beer and be able to pay suppliers. It means that the bank only gets repaid for part of the money they conjured out of nothing. Debt restructuring doesn't necessarily reduce spending, a lot of that is money that is flowing into credit markets. Investments. Pure rent seeking profit. So restructuring this debt does help because it frees up cash flow for spending on real goods.
He mentions depressions leading to war. This is basically just vealed threat that war happens if you don't deleverage how we say. What he doesn't mention is that war isn't just some unfortunate aftereffect of bad economies. War is often specifically caused by the central bankers enforcing their will on nations; whether when a country defaults or threatens to default or when a country threatens to leave (or not join) their system. Many, if not most, of the wars of the 20th and 21st century had this as one of the root causes, if not THE root cause.
A few other things he fails to mention.... you will often see asset inflation during deflationary periods as investors chase safe harbors of money. This occurred starting in '01 and in part made the boom last until '08. The problem is, this only puts off the inevitable and makes the bust worse.
Also, his fails to mention commodity markets, which includes a lot of the things pictured in his economic gears like corn, oil, etc. These have slightly different behavior than he mentions and have natural cycles because over time, the average price of the market falls to just below cost of production. These markets only recover when enough producers go out of business. These busts are sharp because it only takes a small % oversupply to tank the market. This has more to do with supply and demand and commodity pricing than debt. If you are an entrepreneur or a policy maker you need to understand these markets. Most people don't. Some of you here are into homesteading/farming; you absolutely need to understand commodity market economics.
Lastly there is the issue of oil dollars and narco dollars. If you really want to understand what drives our economy you have to understand those. I'll refer you to Catherine Austin Fitts for that.
