The current financial system’s reliance on debt and asset inflation risks economic and housing stability, worsened by climate impacts. To address this, finance must be reimagined to support the real economy through mortgage reform, separating banking functions, focusing on productivity-driven growth, enhancing social safety nets, and reorienting central banking policies toward sustainability.
Post-2008, low interest rates and debt-driven growth have led to asset inflation without real value creation. Policymakers have avoided necessary changes, risking future financial instability by prolonging an unsustainable debt economy.
Finance-led growth is fragile and is dependent on increasing debt to sustain economic activity. Mortgages underpin the system, but as households face flooding risks and economic pressures, the reliance on future borrowing can lead to inevitable crashes, as history has shown, underscoring a fundamentally unsustainable model.
The 2007-08 financial crisis was caused by aggressive lending and securitization practices that obscured risks, leading to widespread defaults and a global recession.
What happens when flooding risks affecting UK housing end up impacting the financial system’s reliance on mortgages as a savings vehicle? Banks have the unique ability to create money through issuing debt, fundamentally transforming loans into financial assets with multiple ownership claims. This profit-driven model enables extensive capital generation, significantly impacting households and the broader economy.
Incarnation points us towards our situated-ness, our rooted-ness and our need for belonging within a concrete locality.
thejoyofrachel 