Our economy has increasingly been financialized, and the result is a sluggish economy and stagnant wages. We need to decide whether to stop the cycle and save the economy at large, or to stay in thrall to our banks and bondholders by leaving the debt hangover from 2008 intact. Without a debt writedown the economy will continue to language in debt deflation, and continue to polarize between creditors and debtors. This debt dynamic is in fact themajor explanation for why the U.S. and European economies are polarizing, not converging.
As a statistical measure, financialization is the degree to which debt accounts for a rising proportion of income or the value of an asset, such as a company or piece of property. The ratio tends to rise until defaults lead to a crisis that wipes out the debt, converts it into equity, or transfers assets from defaulting debtors to creditors.
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