Money is created by the banks (not, as the myth has it, by the government), who must keep creating money, even when there is no need for it. … Median wages have been stagnant for the last 30 years and have actually shrunk since the start of the Cheney-Bush administration. The banks had to find borrowers, and the pool of prime quality borrowers was insufficient. So they went to subprime borrowers.
This actually worked pretty well. One thing must be clearly understood: the subprime market did not fail; … Most subprime borrowers are paying their notes, and will likely continue to do so until the economy collapses … They are not the cause of the problem. Rather, the problem is caused by the vast market for “derivatives,” a series of side bets on the mortgage markets.
But even more importantly, this myth-making breaks the solidarity with the poor, and solidarity should guide all of our policy decisions.