Asset-based Keynesianism substituted private debt-fueled speculation for direct government investment

Evidence

Many efforts have been made to offset this decline. In the 1990s, the government facilitated “titanic bouts of borrowing and deficit spending,” but rather than government debt, as in the past, this was debt incurred by corporations and households, fueled by cheap credit funneled into the stock market. This was a new model of growth: not Keynesianism, in which direct government investment in employment and infrastructure can stimulate the economy, but what Brenner calls “asset-based Keynesianism,” indirect government-facilitated investment in assets and equities in an attempt to kickstart the economy. … By 2007, unmatched waves of speculation, sanctioned by policymakers and regulators, led to a final phase of subprime lending (offering mortgages to borrowers with a low credit score and a high risk of default) and highly leveraged lending, which finally tipped the scale, resulting in a prolonged crisis. The housing bubble popped, the contagion spread to financial securities backed by mortgage debt, and banks began to collapse. Massive bailouts were awarded to Wall Street, while Main Street was largely abandoned, with unemployment, eviction, homelessness, and suicide spiking in the long recession that followed. — Andrew deWaard, Derivative Media, 83

Categorization

• DEFINE: Defines Brenner’s ‘asset-based Keynesianism’ in contrast to classic Keynesian direct investment.
• ADDENDUM: Relevant background tracing the debt-financed engine out of which the later Wall-Street-to-culture causal chains are presumed to run.