Because the system is self-reinforcing, profitable for the powerful, and structurally unable to stop itself.
That sounds dramatic, but in the village model it becomes very clear.
1. The system rewards the behavior that breaks it
In the village with banks:
• Lending for houses and assets is:
• Safe (collateral)
• Predictable
• Politically protected
• Lending for people and production is:
• Risky
• Slow
• Hard to collateralize
So banks that fuel bubbles:
• Make more money
• Look more “successful”
• Get bigger
Banks that don’t:
• Get outcompeted or absorbed
👉 The system selects for bubble-creators.
No one has to be evil. Incentives do the work.
2. Every cycle makes stopping harder
Each time the village goes through a boom:
• House prices rise
• Debt rises
• More people become dependent on high prices:
• Owners
• Pension funds
• Banks
• Governments (tax revenue)
Now imagine the chief says:
“Let’s lower house prices.”
Half the village panics.
So the system learns:
“Crashes are unacceptable. Bubbles must be protected.”
This leads to…
3. Bailouts teach the wrong lesson (but they’re unavoidable)
When the bubble bursts:
• Debtors can’t pay
• Banks are insolvent
• The economy freezes
The chief has two options:
1. Let the system collapse
2. Print money and rescue it
Option 2 always wins.
But that sends a message:
“If it gets big enough, it will be saved.”
So next time:
• More risk
• Bigger bubble
• Bigger rescue
This is called moral hazard, but the name hides how deep it is.
4. Debt needs growth — even when growth is harmful
Remember:
• Principal is created
• Interest is not
So the village must:
• Grow production
• Or grow debt
When real growth slows (aging population, limits, climate):
👉 Debt growth replaces it.
That pushes money into:
• Assets
• Speculation
• Rent extraction
The system would rather inflate house prices than admit limits.
5. Inflation is politically safer than reform
Real fixes would require:
• Limiting bank lending
• Forcing debt write-downs
• Lowering asset values
• Redistributing power
That hurts:
• Wealthy voters
• Institutions
• Political donors
Inflation, instead:
• Is gradual
• Is confusing
• Can be blamed on “external shocks”
• Quietly transfers wealth upward
So inflation becomes the pressure valve.
6. People experience symptoms, not causes
Most villagers feel:
• Rent too high
• Life more stressful
• Debt everywhere
But the causes are:
• Abstract
• Technical
• Hidden behind jargon
So anger gets redirected to:
• Immigrants
• Welfare recipients
• Cultural issues
• “Lazy people”
The system survives because the blame never lands where it belongs.
7. Why smart people don’t “fix it”
Many insiders do understand.
But:
• They’re inside institutions that would collapse if they acted
• Reforms would cause short-term pain
• Politicians operate on short time horizons
So they manage the system, not cure it.
It’s like doctors keeping a patient alive on a drug they know is slowly killing him — because withdrawal would be fatal right now.
8. The darkest truth (and the most honest)
This system keeps repeating because it works — just not for everyone.
It:
• Concentrates wealth
• Maintains control
• Avoids open collapse
• Kicks costs into the future
And each cycle:
• Reduces the chance of a clean reset
• Increases dependence on the system
One sentence that explains everything
When a system requires constant growth, rewards speculation, and socializes losses, it will repeat its crises forever.
Why people like you feel this so strongly
You’re noticing that:
• The economy produces abundance
• But distributes insecurity
• And calls that “normal”
That cognitive dissonance is real — and healthy.
If you want, next we can:
• Talk about what would actually break the cycle
• Or why housing is always the trigger
• Or why this system feels especially cruel now, not 30 years ago
