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a simple piece of Kalecki analysis that is NOT taught in economics classes, and hence NOT used in central banks or think-tanks, and thus NOT recognised in most market research:

Banks create debt (and hence broad money-supply) via lending. If that lending goes to productive investment the stock of money and goods are matched and there is no inflation and there is no long-term increase in debt to GDP. If the productivity growth from the new enterprise is fairly split between profits (for further investment) and wages (for consumption) then the growth cycle continues without a long-term increase in debt to GDP.

However, if businesses push down wages for profit–via globalisation–then consumption growth can only be sustained by borrowing, and debt to GDP trends up: when it hits a peak, growth permanently slows. At that point, businesses have no need to borrow – or if they do it is to speculate on financial assets and not invest in productive business. Growth slows further, and the cycle breaks down structurally. Governments have to then invest more and/or force wages higher. [YOU ARE HERE].

Central banks lowering rates merely sees housing and/or equity bubbles running on fumes. Each hiking cycle is replaced by an easing where we see lower highs and lower lows until we go negative – which is de facto debt default. And/or we do QE, which the Bank for International Settlement recently agreed does not flow to the real economy, but pours more liquidity into asset markets, making the rich richer. Unless QE allows governments more room for fiscal spending – which is de facto debt default. [YOU ARE HERE]