Scroll down past the BIG banner ad and you will see a very fine article analyzing the current US economic situation. For me, the money shot is in the first paragraph:
…the size of the financial system grossly exceeds the productive capacity of the underlying economy.
That’s all that needs to be said. What does the financial system do that is worthwhile to everyone? It allocates resources to the most productive uses. Further, the financial system of an imperial center draws in resources from the periphery and spends them on the center. Good for the people at the center of the empire, not so good for the provinces.
To the extent that the financial system receives more resources than is justified by its role, it is unproductively allocating resources, which means less for everyone except people in finance and their immediate beneficiarys like public officials.
The financial system is so huge now that much of the work that everyone in the world is doing is being wasted, resources are being misallocated, and scarcity for most people is increasing.
FWIW I see a Japanese style “bright depression” for the US. Endless popping bear market bubbles that mean no real growth, just more money for the people that make money off of transactions. I am not alone in this prediction, it’s semi mainstream now.
What makes my ideas a little wilder is that I think this was engineered on purpose. I read a great analysis in 2003 that predicted the crash, predicted the bright depression, and said it was useful in that it was a more secure future for our creditors (oil producing countries).
I note also that just as Japan has lost much of its world economic mojo during its bright depression, this is also an excellent mechanism to spread prosperity more evenly throughout the world at the expense of the american consumer, but for the benefit of american and international elites as this increases the size of the global marketplace. I have read analyses and expected this trend since 2002 as well.
Sadly, it all seems to be happening. Sorry guys for having to live in my self-fulfilled prophecy world which has been good for me but not so good for my fellow americans in aggregate.