BRUNO BERTEZ
LE 27 SEPTEMBRE
THE ACCUMULATED DEBT IS “THE DEAD MAN” OF OUR SYSTEMS. OVER TIME, IT IS GRADUALLY “THE DEAD MAN” WHO TAKES COMMAND AND IMPOSES HIS LOGIC — A LETHAL LOGIC, OF COURSE.
Monetary signs, debt, political promises, and the material means of honoring those promises do not belong to the same order of reality.
To confuse these four planes is precisely what postmodern, bubble-driven, unanchored markets do. They float above the real economy.
The quotations from Alan Greenspan, Larry Lindsey, and Jamie Dimon reproduced below warn against the illusions created by money and currency as mere signs.
A dollar, a Treasury security, a pension claim, or an entitlement to healthcare is first and foremost a sign. These are bookkeeping entries, units of account, nominal values, legal commitments — even political ones. They can be multiplied, indexed, and guaranteed “as far into the future and in any amount one wishes.”Greenspan put it bluntly in 2005: the state can guarantee cash. It cannot guarantee purchasing power.
Debt is merely the accumulation of these signs that have not yet been redeemed by taxation. In itself, it is not a stock of food, housing, doctors, energy, or workers. It is a set of claims on future production.Promises — pensions, healthcare, minimum income, indexation, acquired rights — transform these signs into social expectations.
They create a political demand: “we were promised.” But a promise does not add a single real good to the economy.The relationship between the signs, their stock, and the capacity to honor them is, in a sense, the fundamental question of confidence.
Material means are something else entirely: hours of work, productivity, skills, factories, hospitals, power grids, land, raw materials.This is the “pie” Greenspan spoke of in 2015. If that pie does not grow fast enough, raising the share of entitlements from 4.7 percent to 14.7 percent of GDP (and still higher since then) enriches no one.
It merely reallocates resources, compresses investment, and ultimately erodes the standard of living it claimed to protect.
That is the entire tension running through the texts below.The experts do not deny that one can “finance” nominally almost anything. They doubt that one can actually deliver it without a political crisis, without inflation, and without a war between generations.
“We can guarantee cash benefits as far into the future and in whatever amount you would like, but we cannot guarantee their purchasing power. That is why this question ultimately has to be resolved in terms of whether we have the physical goods and services that people will need to consume, not whether we go through some financing constraint, because financing is a secondary issue.”
— Alan Greenspan, Fed Chairman, February 16, 2005“
Over the longer term, productivity has slowed, which has taken social benefits from 4.7 percent of U.S. GDP in 1965 to 14.7 percent of GDP today. Had productivity continued to improve, it would have continued to raise living standards and wages. The weight of entitlements as a share of the pie has to be reduced, and that has to be settled before a crisis breaks out… Unfortunately, I do not see how we get out of this.”
— Alan Greenspan, former Fed Chairman, May 2015
“By the way, it always ends this way: Rome, the Ming dynasty, Zimbabwe… it is so depressing. It always, always, always ends this way — this endgame we all talk about. The government’s financial arrangements are no longer sustainable… it is not a pleasant change if we get there, and it is a question of political freedom, because the government will NOT willingly put itself out of business… it will use every power a government has to finance itself.”
— Larry Lindsey, former Fed Governor, May 2015“
I do not believe these issues will cause a crisis in the next five to ten years, and unfortunately that may lull us into a false sense of security. But after ten years, it will become clear that action will be required. The problem is not that the American economy will be unable to take care of its citizens — it is that withdrawing benefits, creating a war between generations, and looking for scapegoats will produce very difficult and very bad politics. It is a tragedy we can see coming. Early action would be relatively painless.”
— Jamie Dimon, CEO of JPMorgan, April 6, 2016
The skepticism that emerges from these remarks is not a rejection of the welfare state. It is a diagnosis of a temporal and real mismatch.
Greenspan draws a clear distinction between the nominal and the real.In 2005, before the Senate, he recalled that a pay-as-you-go system “moves money around” but does not create national saving.
In 2015, he hardened the argument: the rise in social rights and entitlements has absorbed gross saving, and therefore investment, and therefore productivity.
Financing is “secondary” only if the resources are already there.
If they are not, financing becomes inflation, higher interest rates, or crowding-out.
Lindsey goes further: history shows that when a state’s financial arrangements cease to be sustainable, power does not commit budgetary suicide. It finances itself by every available means — monetary depreciation, extraordinary taxation, controls, financial repression, plunder, and wars, as we are seeing at this very moment.
The risk is not merely economic; it is political and geopolitical.
Dimon, more cautious, dates the problem. In 2016, he ruled out an immediate crisis (five to ten years). We are now in 2026: the window he identified is now open before us.
His sharpest point is not the technical insolvency of the United States. It is the politics of delayed adjustment: withdrawing rights, setting the young against the old, searching for culprits.What Dimon says is particularly accurate in that he explains how the gap between signs and reality produces oppositions — that is to say, conflicts, wars, and violence.
Dimon puts us on the trail of the need, even the necessity, of imperialism.
When the system has promised too much and that excess threatens the established order, the beneficiaries of that order prefer wars and social impoverishment to the abandonment of their privileges.
We have arrived at that point.
Early action would be “relatively painless”; inaction prepares bad politics that is all too likely to turn into drama.
Their skepticism is shared: one can long conceal a gap between promises and resources through debt and money creation. One cannot close that gap indefinitely without someone ultimately paying — through taxes, inflation, financial excess, reduced benefits, weaker growth, and of course colonial or even imperial wars.
The impact of the debt system is not a mere figure.
Debt has concrete effects, even for a sovereign issuer in its own currency. In the United States, the adverse effects are multiplying and reinforcing one another:
- Interest costs. Debt service has become one of the largest budget items, on the order of a trillion dollars a year, and it is growing faster than GDP. Each additional point of interest on an already enormous stock reduces the room for everything else.
- Crowding-out. A lasting rise in public transfers, financed by borrowing, reduces the national saving available for productive capital. Less investment, less productivity, less future growth — and therefore a narrower base on which to honor the same promises.
- Vulnerability to rates. As long as rates remain low, the stock of debt can be serviced. When they rise, the deficit feeds on itself (the deficit–interest–debt loop).
- Geopolitical constraint and solvency. The United States does not default in dollars for lack of technical capacity. It can default de facto through inflation, through a brutal reform of entitlements, or through a crisis of confidence that forces a disorderly adjustment. Partners know this and are hardening their stance.
- War between generations. Today’s claims are levies on tomorrow’s labor and production. The longer one waits, the more the adjustment is concentrated on a few cohorts.
- Imperialism and a return to colonialism. This is particularly clear under the Trump mandate, whose entrepreneurial record has been marked by repeated bankruptcies: the whole of Trump’s management is placed under the sign of debt that cannot be honored, and that produces plunder, tariffs, tribute payments, and blackmail, pending the great explosion.
Little by little, debt paralyzes all public policy.
It changes the content, the price, and the timetable of that policy. It turns discrete choices into continuous constraints.As I have been saying since March 2009, the debt system is a mechanism — a fatal, destructive, and irresponsible mechanism.In 2009, what was needed was the courage to “destroy the rot” of debts that could not be honored.
THE ACCUMULATED DEBT IS “THE DEAD MAN” OF OUR SYSTEMS. OVER TIME, IT IS GRADUALLY “THE DEAD MAN” WHO TAKES COMMAND AND IMPOSES HIS LOGIC — A LETHAL LOGIC, OF COURSE.
