When Capitalism Died, And How Creditism Replaced It

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Capitalism’s death warrant was signed on March 19, 1968. That is when President Lyndon Johnson signed Public Law 90-269. With a stroke of his pen, Johnson eliminated the requirement that the Federal Reserve back the U.S. dollar with gold reserves. Whether it was understood at the time, what’s unfolded since would have been unimaginable to Johnson. Delinking the dollar from gold produced the conditions for breathless changes in monetary and fiscal policies, and the creation of an entirely new driver of economic growth.

Capitalism didn’t expire immediately. Eventually, however, policy makers, central bankers and politicians began to appreciate that they had at their disposal a magical ability to keep interest rates low and impact economic growth in entirely new ways.

Once this realization took hold, capitalism’s days were numbered.

If capitalism died, what took its place? The macro economist, Richard Duncan, has written extensively on this topic. Duncan’s term for the system that succeeded capitalism, the one based upon fiat money, is creditism. An author, lecturer and publisher of the video newsletter, Macro Watch, Duncan has shown that, unlike in the past when the economy grew as a result of businessmen and women saving and investing, earning profits – capital – and reinvesting their capital, today it is annual increases in the total volume of credit that makes the economy grow and keeps asset prices climbing. Duncan believes that this fact is the single most important thing to understand about today’s economy.