Before the 1980s, banks couldn’t use people’s deposits as collateral for investments. Banks were not allowed to use their customers’ deposits to invest them. Up until the early 1980s, when you owned a share in a company, a building or a field and wanted to buy or sell other shares, the state levied transfer duties. It costed money to exchange shares. As a result, money was invested over a number of years, and investors had to pay close attention to what they were buying. They had to ensure that their investment would be viable over the long term. This risk-taking was used to justify capitalism. Co-owners and investors took risks with their money, and as a result, they made the decisions. Risk was rewarded. Strict rules were put in place: investors were very well informed about what they were buying, and the share was bought without intermediaries (for example, a share in a farm, a share in Ford, etc.). The post-war “golden age” was a very prosperous period for most people in the West. It was a period of strong regulation and state intervention. The ultra-rich weren’t as rich as they are today, but they already had more than enough. Ronald Reagan and Margaret Tatcher introduced a massive financialization of the economy: lower taxes and less regulation (deregulation). This had three effects. – Firstly, anything can be converted into shares on the stock market, and any name can be assigned to it: these are securitization transactions. For example, the sporting performance of a soccer team, NFTs (a computer image with a paint design) or a loan. What’s more, products are not purchased directly: you can securitize products that are themselves securitized. The investor has no idea what he’s buying. – Secondly, banks have the right to use their customers’ deposits to invest. They take risks with the money entrusted to them by their customers. After the 2008 financial crisis, banks must have a minimum deposit to guarantee their customers’ money up to a certain amount …

#Financialization, #deregulation and #securitizationtransactions: www.aurianneor.org/financializa...

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