We have the largest saving rate in the history of capitalism and the lowest investment rate, and this imbalance is at the bottom of the various manifestations of a crisis that’s been happening now for a while. 2008 as far as I’m concerned, was our generation’s 1929. In exactly the same way that after 1929 the world ceased to make sense in terms that people used to understand their world prior to 1929. After 2008, it’s a different ballgame. If you look between the 1940s and 2008, we have a situation where the United States of America was playing a rather efficient but complicated role in global recycling [of saved income]. Recycling [income] surpluses from where they were being produced to where there were deficits. Initially in the first twenty years after Bretton Woods, America was a surplus country and it was recycling its own surpluses politically, using political machinations, I mean, the Marshall Plan is just one example.
But with the end of Bretton Woods, which happened because America lost surpluses and could no longer recycle a surplus it didn’t have, we moved into completely different phase, again with America in the driving seat, where the American economy, through its strong deficit spending, was recycling everybody else’s surpluses. It didn’t have surpluses to recycle itself so it recycled other people’s surpluses by acting as a huge vacuum cleaner that was sucking into American territory. That broke down in 2008. Wall Street has lost the capacity to do this recycling in a way that maintains savings and investment. And the fact that our political sphere is imploding is a reflection of the breakdown of this global recycling mechanism. ~ Yanis Varoufakis