Short answer first, then the honest long one:
What would break the cycle is breaking the link between money creation, asset speculation, and survival.
Everything else is decoration.
Now let’s unpack that clearly, without pretending it’s easy.
The cycle, reduced to one sentence
Banks create money → money flows into assets → assets inflate → people borrow to live → crises → bailouts → repeat.
To break it, you must interrupt this loop at multiple points at once. Doing only one thing fails every time.
1. Take housing out of speculation (this is the keystone)
Nothing breaks the cycle without this.
Why housing matters so much
• It’s scarce
• Everyone needs it
• It’s perfect collateral
• It absorbs infinite debt
As long as housing is an investment, debt will always flow there, because it’s the safest place for banks.
What actually works
• Massive public / cooperative housing
• Non-profit ownership models
• Strict limits on speculative buying
• Land value taxes (tax land, not work)
• Zoning reform that allows boring, dense housing
Countries that do this:
• Austria (Vienna)
• Singapore (with authoritarian trade-offs)
Without this, every wage increase becomes rent inflation.
2. Control where banks can create money
This sounds radical, but it’s boringly technical.
The rule that matters
Banks should create money mainly for:
• New production
• Infrastructure
• Energy
• Housing construction (not resale)
And not for:
• Asset flipping
• Existing property
• Pure speculation
This can be done with:
• Capital requirements
• Credit guidance
• Differential interest rates
This used to be normal policy. We just forgot.
3. Give people money without debt
This is the part people instinctively understand — including you.
Examples:
• Universal basic income (modest, permanent)
• Guaranteed minimum income
• Automatic stabilizers (money rises in downturns)
Why this helps:
• Reduces reliance on loans
• Weakens banks’ leverage over daily life
• Stabilizes demand without bubbles
Inflation risk?
👉 Only if supply bottlenecks are ignored (housing again).
4. Accept that asset prices must fall (this is the taboo)
There is no painless exit.
To break the cycle:
• Some debts must be written down
• Some asset values must fall
• Some paper wealth must disappear
Every failed reform tries to avoid this.
Every successful one accepts it.
This is why politicians don’t do it.
5. Shorten the time horizon of capitalism
The system repeats because:
• Profits are immediate
• Costs are delayed
Fixes:
• Higher taxes on short-term gains
• Rewards for long-term investment
• Less obsession with quarterly results
• Stronger worker representation
Germany-style co-determination is not an accident — it dampens bubbles.
6. Reframe inflation honestly
Inflation is not always the enemy.
Bad inflation:
• Rent
• Healthcare
• Energy monopolies
Acceptable inflation:
• Wages
• Productivity-linked growth
Right now we protect the wrong prices.
7. Why this hasn’t happened (yet)
Because breaking the cycle requires:
• Coordination
• Courage
• Admitting past mistakes
• Angering powerful interests
• Accepting short-term pain
Systems rarely reform themselves voluntarily.
They reform after:
• War
• Depression
• Or slow decay that becomes unbearable
The uncomfortable but hopeful truth
This system is not broken — it is outdated.
It was designed for:
• Endless growth
• Cheap energy
• Young populations
None of those exist anymore.
So either:
• We redesign it deliberately
or
• It will keep breaking for us, more violently each time
One final sentence (worth sitting with)
The cycle breaks when survival stops being a debt-based privilege and becomes a guaranteed foundation.
If you want, we can next:
• Design a post-cycle village economy
• Talk about why Switzerland is closer than most
• Or explore whether collapse or reform is more likely in your lifetime
