The Bad PlaceCounterPunch.org | The 2026 World Financial Crisis by Michael Hudson
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The article argues that today’s soaring interest rates are not a rational response to inflation but a dangerous tool of finance‑capitalism that deepens an already‑crumbling economy. By tracing the historical myth that interest compensates creditors for price‑level risk, the author shows how lenders have long used debt to inflate asset prices—real estate, stocks, and bonds—rather than to fund productive industry, creating a Ponzi‑like system that depends on ever‑increasing leverage. The post‑2008 zero‑interest policies further entrenched this debt‑driven boom, enriching a tiny elite while leaving the real economy stagnant. With a looming oil and energy shortage threatening to shut down key industries, rising rates will make refinancing impossible for many borrowers, precipitating widespread defaults, collateral seizures, and a deep depression that the Federal Reserve and governments are likely to bail out only for the financial sector, not for labor or productive firms. The piece concludes that without a radical debt‑cancellation akin to ancient Hammurabi’s debt relief, the impending crisis will unleash massive transfers of wealth from debtors to creditors, underscoring the need for solutions outside the market system.
Read more: https://www.counterpunch.org/2026/05/20/the-2026-world-financial-crisis/