Too much fertilizer is bad for the crop

With my previous post in mind... 

 

You don't need a reason like "exhaustion of the soil" to get financialization going. In our case, we began with too little finance, decades ago: debt was below its optimum level. So expanding finance turned out to be a good thing. 

And so policymakers adopted the principle that expansion of finance is a good thing. That put us on the road to ruin. Policymakers forgot that the effects of debt are non-linear. The effects are good when debt is low, and harmful when debt is high.

Policymakers went with the linear view that the expansion of finance is always good. They were wrong, and we are paying for it now. 

Debt is like fertilizer: A little is better than none. And just the right amount is better yet. But too much makes things worse. It's not that hard to figure out, unless maybe you are a policymaker.