ABSTRACT
This chapter examines how the financial foundations of the dollar creditocracy, the form in which the dollar system would now operate, were laid after the closing of the gold window in 1971. It examines the chief mechanisms of the Long Downturn and the pace and pattern of economic activity it produced, undermining production and expanding financial activity, exacerbating the demand problem and increasing inequality astronomically in the process. The chapter outlines how the volatile dollar system operated, requiring ever larger financialisations to keep going even as US authorities’ abilities to deal with the consequences of crashes manifestly failed to keep up with them. Having narrowly avoided catastrophe, Western financial institutions changed their lending practices to securitised lending. Neoliberalism was supposed to reinvigorate capitalism, restore the ‘animal spirits’ allegedly dampened hitherto by the ‘dead hand of the state’ and by overpowerful unions.
