2. Money Changes Everything

The Financial Times advertises the new Zeitgeist: “We live in financial times.” Earlier, Heinrich Heine, the German poet, also identified the change: “Money is the God of our time.”¹ In the later half of the twentieth century, individuals became true believers.

Human history is a sequence of ‘ations’—civilization, industrialization, urbanization, globalization; interspersed with actual or threatened annihilation (war, genocide, or the mutually assured destruction [MAD] pact of the Cold War). The most recent “ation” is financialization—the conversion of everything into monetary form (known as another “ation”—monetization). Increasing wealth, increasing consumption, increased borrowing, and the need to save for retirement has financialized individual lives. It has provided scope for other “ations”—manipulation and, its sibling, exploitation.

Mrs. Watanabe Goes to Wall Street

Nothing illustrates the financialization of everyday life better than Japan. Foreigners—gaijin (loosely, “round eyes”)—find Japan strange, especially its toilets. Japanese toilets are fitted with blow dryers, seat heating, massage options, water jets, automatic lid opening and closing, automatic flushing, deodorizing, heating, and air conditioning. Some feature music to relax the user’s sphincter (Frühlingslied Op. 62 No. 6 by Felix Mendelssohn). Female toilets feature an otohime—a black, square, motion sensor—that when activated produces the sound of flushing water to avoid others overhearing the noise of your bodily functions.

Japanese finance is equally strange. It is famed for its stockbrokers, who go door-to-door seeking to entice individuals to invest in stocks and other financial products, and its female speculators—collectively Mrs. Watanabe, a common surname.

Japan has the world’s largest pool of savings—estimated at more than ¥1,500,000 billion (more than $15,000 billion), built up through legendary frugality and thrift during Japan’s rise to prosperity after the Second World War.

Yuki Wada, a 35-year-old homemaker and blogger, is a setsuyaku no tatsujin (master penny-pincher). She recycles bath water to do her laundry and clean the toilets, keeps energy costs down by cutting power to most of her home when she goes out and selects appliances based on electricity usage. Wada polishes her shoes using saved tangerine peels and washes her floors with sour milk. A staple of talk shows, she even shares her tips on saving money with government officials.

Japanese savings are kept in bank accounts or literally under the bed—known as tansu savings, after the traditional wooden cupboards in which Japanese store possessions. Japanese women invest these savings.

Japan survived the stock market crash of 1987, but its bubble economy collapsed at the end of 1989. A boom based on excessive debt and overvalued shares and property ended, leading to the ushinawareta junen—the lost decade. Losses on bad loans triggered bank failures, requiring massive government intervention. Interest rates fell to near zero, and the economy ceased to grow. Today, the Japanese stock market is around 75 percent below its 1989 level. The Japanese economy remains moribund.

Forced to hunt for higher returns, older retired Japanese dependent on investment earnings moved their retirement savings (toranoko—Tiger’s cub) from bank accounts, paying a derisory 0.01 percent per annum, into riskier investments. Attracted by the high returns offered, 5 percent per annum, money went into investment funds—Asian Infrastructure nantoka nantoka Fund, Emerging Market High Yield nantoka nantoka Fund, and so on. (Nantoka means “something or other” or “what-you-ma-call-it”). The bulk of investments went into foreign-currency-denominated bonds and deposits.

FX Beauties Club

Young, usually 30-something, computer-literate Japanese women, known as the clickety-clicks, traded, online. Borrowing (up to) $98 of every $100, they traded the euro, U.S. dollar, Australian dollar, New Zealand dollar, pound sterling, and exotic currencies such as the South African rand and Turkish lira.

A celebrity cult of housewife traders—pin-up Mrs. Watanabes—grew. There is Fumie Wakabayashi, a 31-year-old author of the book I Like Stocks and creator of a Nintendo DS investment game. There is Yukiko Ikebe, the kimono trader, who made profits of an estimated ¥400 million ($4 million) on commodity futures and currency over 3 years, becoming a regular on the investment lecture circuit and writing the book The Secret of FX. Another famous housewife-trader is Mayumi Torii, a 41-year-old single parent, who quickly earned $150,000 from margin trading in currencies. She wrote a book on her investing strategies and founded a support group for home traders, the FX Beauties Club. (FX is short for foreign exchange.)

Some housewife traders trade compulsively, staying up to trade during European and North American hours. They ride the volatility, trying to get in and out quickly to make money. Fumie Wakabayashi admitted that in her youth she occasionally did drunk trading after too many cocktails.

Such speculative trading benefited from high interest rates in foreign currencies and gains from falls in the value of the yen against overseas currencies. At the peak, Mrs. Watanabe accounted for around 30 percent of the foreign exchange market in Tokyo. Mrs. Watanabe’s buying and selling at banks and brokerages became a guide to changes in the value of the yen. In the 1964 pound sterling crisis, the British politician Harold Wilson described financial speculators as the “gnomes of Zurich.” Mrs. Watanabes now wielded similar influence in currency markets.

Professional traders, hedge funds, and banks followed Mrs. Watanabe’s actions and mimicked them via the yen carry trade—investors borrowed in yen at low interest rates, converted it into foreign currencies and invested the money at higher rates. Investors enjoyed the carry—the difference between the income (high interest rates in the foreign currency) and the cost of borrowing (low interest rates in yen).

Investors played these games with borrowed money. Larry the Liquidator in the film Other People’s Money confesses that he loves one thing more than money: other people’s money.

Mrs. Watanabe ignored the risk of loss of her investment as long as the high income kept rolling in. As long as the yen did not increase in value against the currency of the investment, the strategy worked. During the early 2000s, the strategy was profitable, as the yen steadily weakened, falling to 20-year lows. In 2007, the yen began to rise and returns on investments around the world fell. Mrs. Watanabe, together with more sophisticated hedge funds, was forced to dump assets bought with borrowed money, losing billions.

In Japan, there are strict cultural taboos against money that is not earned by honest effort—“with sweat from the brow.” But even Japan had embraced financialization. The rest of the world followed. As Cole Porter sang in the 1930s, now almost anything went.

Plutonomy

For most people, money was the link between work and the essential victuals of life. It also provided financial independence and protection against uncertainty. For a small group, wealth provided social acceptance, power, and influence. It became a means for self-expression, a statement of status and selfhood. As F. Scott Fitzgerald observed: “Let me tell you about the very rich. They are different from you and me. They have more money.”²

In his 1899 book The Theory of the Leisure Class, Thorstein Veblen, a Norwegian-born American economist, created the term conspicuous consumption, meaning the waste of money or resources by people to establish higher status. Conspicuous leisure was the waste of time by people to achieve the same thing. By the late twentieth century, it was unnecessary even to spend money on useless things and wasteful pursuits. Control of large sums of money—a large bank balance, real estate or stock holdings, and investments in exclusive hedge funds—were proof of membership of the leisure classes.

Ajay Kapur, a CitiGroup investment analyst, coined the term plutonomy to describe the global split between the rich and the rest. Wealth was highly concentrated in the United States, Canada, and UK. Europe, excluding Italy, and Japan were more egalitarian. In emerging economies, a small group also controlled most of the wealth. The top 1 percent of households in the United States accounted for about 20 percent of overall U.S. income, about the same share of income as the bottom 60 percent of households. The top 1 percent of households accounted for more than 30 percent of net worth, greater than the entire bottom 90 percent of households put together. Writer Robert Frank observed that the wealthy inhabited a different country—Richistan.³

Gains from recent economic growth flowed disproportionately to the wealthy, who benefited from market-friendly governments, favorable tax regimes, protection of property rights, globalization, and technological change, and financial innovation and deregulation. The top 10 percent of earners received the majority of the benefits of the productivity miracle of 1996–2005.⁴

Wealthy plutocrats both powered and benefited from economic growth. The Forbes 400 richest people in 2006 controlled $1,250 billion, up $92 billion from 1982. To make it on to the list in 2006 you had to have a billion, compared to $75 million in 1982. This money was invested, making more money to fund consumption or simply to attest to wealth. For the wealthy, financialization of life was trading and speculation; using money was a means to an end and an end in itself. This even changed the source of wealth, with almost a quarter of the 2006 rich owing their fortunes to the finance sector compared with less than one-tenth in 1982.

Trickling Down, Trading Up

Most of the population generally got richer, not über or even mega rich, but comfortable. Middle-class incomes increased broadly throughout the world.

In 1914, Henry Ford doubled workers’ pay from $2.34 to $5 per day and introduced a new, reduced working week. Ford argued that paying people more would enable workers to afford the cars that they were producing. The U.S. auto industry pioneered the basic wage in 1948. Harley Shaiken, a labor economist at the University of California at Berkeley, observed: “The most important model that rolled off the Detroit assembly lines in the 20th century was the middle class for blue-collar workers.”⁵

In trickle-down economics, benefits flow down from the top to the bottom. During the Great Depression, Will Rogers, the humorist, defined it as: “Money was all appropriated for the top in hopes that it would trickle down to the needy.” In the 1970s, the process went into reverse. The auto industry and heavy industries in the United States and developed countries declined. Technological change deskilled some jobs, driving declines in the earnings of low and middle-income workers. Increasing international trade and globalization meant that jobs were outsourced to developing countries, where labor costs were lower. This brought new wealth to emerging nations but depressed wages and living standards in developed countries. Immigration, both legal and illegal, affected incomes, especially in lower-skilled jobs. The changing labor market and erosion of safety nets meant that individuals and families, other than the plutocrats, lived a precarious existence.

Some borrowed to finance consumption or resorted to financial speculation to offset declining income and safeguard their future, increasingly with borrowed money. Home equity—the difference between the current value of the family home and the amount owed on it—provided the initial financial stake. George Bernard Shaw knew this connection between speculation and wealth: “Gambling promises the poor what property performs for the rich, something for nothing.”

Fumie Wakabayashi, the Japanese housewife trader, started trading hoping to earn more than the ¥900 ($9) per hour wage of a waitress or a receptionist. She wanted to be a nurse but could not afford tuition fees after her father’s business went broke. Yukiko Ikebe started trading to supplement her earnings from teaching flower arranging and later, when she married and had children, to earn extra money for children’s toys and clothes. Mayumi Torii began trading to become economically independent after her first marriage ended in divorce and she had to support herself and her son.

Kapur was interested in how plutonomy affects consumption, which accounts for 65 percent of the world economy. Concentration of wealth means that national spending, profits, and economic growth are disproportionately dependent on the fortunes of the rich. As the rich buy luxury goods and services, Kapur recommended the less wealthy buy shares in Tiffany’s and Louis Vuitton, even if they could not afford the company’s products.

I Shop, Therefore I Must Be!

Economic policies emphasized consumerism, linking material possessions and consumption with happiness. In The Limits to Power, Andrew Bacevich identified the nouveau-Jeffersonian trinity—“Whoever dies with the most toys wins,” “Shop till you drop” and “If it feels good, do it.”

In his 1958 book The Affluent Society, John Kenneth Galbraith argued that society had become obsessed by the production and consumption of ever increasing levels of goods, most of which were not essential. As Ronnie Shakes, the comedian, wryly observed: “I spend money with reckless abandon. Last month I blew five thousand dollars at a reincarnation seminar. I got to thinking, what the hell, you only live once.”

Consumers purchased an increasing range and volume of products—“the desire to get superior goods takes on a life of its own.”⁶ Increased borrowing financed the increased production and consumption of goods.

Advertising fostered demand. In humorist Will Rogers’ words, advertising was “the art of convincing people to spend money they don’t have for something they don’t need.”

In his three best-selling books The Hidden Persuaders (1957), The Status Seekers (1959), and The Waste Makers (1960), Vance Packard, an American journalist, highlighted the use of psychological techniques to manipulate consumers. Status and fear of loss of status was used to sell goods. Planned obsolescence increased demand for products, long before they required replacement.

A toothbrush does little but clean teeth. Alcohol is important mostly for making people more or less drunk. An automobile can take one reliably to a destination and back.... There being so little to be said, much must be invented. Social distinction must be associated with a house...sexual fulfillment with a particular...automobile, social acceptance with...a mouthwash [and so on]. We live surrounded by a systematic appeal to a dream world which all mature, scientific reality would reject. We, quite literally, advertise our commitment to immaturity, mendacity and profound gullibility. It is the hallmark of our culture.⁷

Consumerism increased sales, encouraging businesses to invest. Economic growth required expanded production and higher earnings. Alan Greenspan noted: “Human psychology being what it is, the initial euphoria of a higher standard of living soon wears off.... The new level is quickly perceived as ‘normal.’ Any gain in human contentment is transitory.”⁸ For sociologist Zygmunt Bauman consumption was an “appeal to forever-elusive happiness.” Bauman’s phrase liquid-modernity described a process in which individuals desperately reinvented themselves through consumption.

Consumerism exploited deep-seated human anxieties and changes in society. In July 1989, addressing the students of Dartmouth College, the Russian American writer Joseph Brodsky described modern lives:

You will be bored with your work, your spouses, your lovers, the view from your window, the furniture or wallpaper in your rooms, your thoughts, yourselves...you’ll try to devise ways of escape. Apart from...self-gratifying gadgets...you may take up changing jobs, residence, company, country, climate, you may take up promiscuity, alcohol, travel, cooking lessons, drugs, psychoanalysis...you may lump them together...for a while that may work. Until the day...when you wake up...with a heap of bills from your travel agent and your shrink, yet with the same stale feeling toward the light of day pouring through your window.⁹

For Americans, the attacks of September 11, 2001 added to the sense of insecurity. After the attacks, President George W. Bush urged Americans to go shopping as the best way to help them and the country recover. In 2008, after a terrorist attack at the Taj Mahal Hotel in Mumbai, India, Suketu Mehta, author of Maximum City, echoed George Bush: “The best answer to the terrorists is to dream bigger, make even more money, and visit Mumbai more than ever.”¹⁰

Spend It Like Beckham!

Consumers emulated the tastes, preferences, and lifestyles of people higher in the social hierarchy. The rich needed to “keep up with the Gateses.” The British were “keeping up with the Beckhams.” Wealth gives rise to different concepts of equality. Asked whether the privatization of state assets that was the basis of his fabulous wealth had been fair, one Russian billionaire responded: “Of course not! One of the other oligarchs got a bigger oil company than I did.”

Key positional goods essential to success included a trophy wife or husband, a large expensive house in an up-market suburb, and an expensive foreign luxury car. (Some SUVs were OK!) Expensive clothes, preferably from a bespoke tailor on Savile Row, topped off by a Burberry coat and a gold Rolex watch, were essential. Golf, membership of exclusive country clubs, taking frequent luxury foreign vacations, and owning at least two vacation homes were prerequisites. You also had to start with an exclusive private education, a marketable degree from a prestigious university, and a high-paying job in financial services or consulting.

Consumption habits trickled down. Rhonda Byrne, an Australian writer named by Time in its list of 100 people who shape the world, captured the essence of the new age spirituality in her self-help work—The Secret.

There is truth deep down inside of you that has been waiting for you to discover it, and that truth is this: you deserve all good things life has to offer. You know that inherently, because you feel awful when you are experiencing the lack of good things. All good things are your birthright!

She offered a unique view of reality:

Your mind thinks thoughts and the pictures are broadcast back as your life experience. You not only create your life with your thoughts, but your thoughts add powerfully to the creation of the world. If you thought that you were insignificant and had no power in this world, think again. Your mind is actually shaping the world around you.¹¹

“Shaping the world” meant buying “all good things life has to offer”—usually with borrowed money.

Early adopters of new social trends, Americans led the charge into consumption, shopping malls and borrowing. In the early 1980s, Americans saved 12 percent of their income, and household debt was 63 percent of GDP, the country’s annual production. By 2006, Americans’ savings rate was negative (they spent more than they earned) and household debt as a percentage of GDP soared above 130 percent, a doubling in 25 years. Between 1989 and 2007 credit card debt quadrupled from $238 billion to $937 billion. To fund consumption, Americans borrowed more than $3 trillion against their home equity, the difference between the value of their homes and the mortgage outstanding.

The U.S. Census bureau provides an idea of what Americans were consuming by the middle of the first decade of the twenty-first century:¹²

$200 billion on furniture, appliances ($1,900 per household annually)

$400 billion on vehicle purchases ($3,800 per household annually)

$425 billion at restaurants ($4,000 per household annually)

$9 billion at Starbucks ($85 per household annually)

$250 billion on clothing ($2,400 per household annually)

$100 billion on electronics ($950 per household annually)

$60 billion on lottery tickets ($600 per household annually)

$100 billion at gambling casinos ($950 per household annually)

$60 billion on alcohol ($600 per household annually)

$40 billion on smoking ($400 per household annually)

$32 billion on spectator sports ($300 per household annually)

$150 billion on entertainment ($1,400 per household annually)

$100 billion on education ($950 per household annually)

$300 billion to charity ($2,900 per household annually)

When Americans were not consuming, they were upgrading, buying bigger homes in a better suburb or bigger or better (foreign) cars. Americans who already owned TVs purchased additional sets and upgraded to bigger, thinner, flatter, more pixels, better definition, better viewing angle, and more technology. John Updike’s Rabbit Angstorm, addicted to junk food, captures the greed of the modern age devouring a candy bar and then still unsatisfied “dumps the sweet crumbs out of the wrapper into his palm and with his tongue licks them all up like an anteater.”¹³

In their song Once in a Lifetime, named one of the 100 most important American musical works of the 20th century by National Public Radio, David Byrne and The Talking Heads asked the question of the times: How did you get that large automobile, the beautiful house, and the gorgeous wife?

How did you get here? You borrowed the money from people who thought you could pay it back. Debt-fueled consumption became the norm.

Many societies emphasized “prodigality rather than frugality” and debt (once a source of shame) became an essential part of the modern lifestyle.¹⁴ Credit cards took “the waiting out of wanting.” The phenomenon acquired an obligatory pop-psychology label—affluenza, the feeling of stress, overwork, waste, and debt caused by the endless pursuit of consumption and wealth.

Even the wealthy turned to debt, borrowing against assets to increase returns, making risky investments such as private equity and hedge funds. By 2007, the richest 5 percent in the United States were $1.67 trillion in debt, an increase of around 400 percent since 1989.¹⁵ Eugene O’Neill, the playwright, anticipated the behavior: “that everlasting game of trying to possess your own soul by the possession of something outside it.”¹⁶ Where America led, others followed.

Golden Years

Retirement is the golden years. You need plenty of gold to avoid ending your days in a life of Dickensian poverty. As life expectancy increased, most people’s savings were insufficient to meet their needs when they could no longer work. The process of saving and investment for retirement further financialized lives.

Otto Eduard Leopold von Bismarck, Count of Bismarck-Schönhausen, Duke of Lauenburg, Prince of Bismarck (the Iron Chancellor) introduced provisions for old age, sickness, accident, and disability pensions in the 1880s. In 1942, a committee chaired by Sir William Beveridge, a British economist, released a report—Social Insurance and Allied Services (known as the Beveridge Report)—that formed the basis of the post-Second World War British Labour government’s welfare agenda—the National Health Service, child allowances, and unemployment benefits. State-supported pensions and benefits became an integral part of post-war economies.

Beveridge attacked want, proposing a revolution to create “a better world than the old world.”¹⁷ Beveridge sought to guarantee security of a minimum income. Bismarck’s motivation was preventing revolution:

I will consider it a great advantage when we have 700,000 small pensioners drawing their annuities from the State, especially if they belong to those classes who otherwise do not have much to lose by an upheaval and erroneously believe they can actually gain much by it.¹⁸

Universal if modest government-sponsored welfare arrangements became part of most liberal democracies. In time, employer-supported occupational pension and medical schemes emerged for most workers.

Retirement savings could be PAYG (pay-as-you-go) systems in which welfare was funded through taxes or future income. In funded systems, contributions by the worker, employer, or government were invested to meet future payments. There were defined benefit (DB) schemes where the benefit was fixed, a percentage of final salary, irrespective of contributions. There were also defined contribution (DC) schemes where the contribution was specified, but the benefit received depended upon the contributions and returns earned.

PAYG systems offering DBs worked well while the labor force was growing and the number of pension recipients was small. Over time, payments increased, reflecting increased life expectancy driven by better living standards and improvements in medical science and healthcare. At the same time, the aging population and declining birth rates meant that inflows into the funds declined.

At General Motors (GM), pioneers of employee benefits, legacy responsibilities grew because its workforce began to shrink as the bulge of workers hired in the middle of the century retired and began drawing pensions. Productivity improvements and cost pressures meant that the company was making more vehicles than in the early 1960s but with about one-third of the employees. In 1962, GM had 464,000 U.S. employees and was paying benefits to 40,000 retirees—a dependency ratio of one pensioner to 11.6 employees. By the early 2000s, it had 141,000 workers and paid benefits to 453,000 retirees—a dependency ratio of 3.2 to 1.

In 1889, the Iron Chancellor set the retirement age at 70 years, when average life expectancy was around 45. In 1908, Lloyd George set the British retirement age at 70 years, when few survived past 50. In 1935, America set the official pensionable age at 65 years for the social security system, when the average lifespan of Americans was around 68 years. The schemes were never meant to cover workers for ever-lengthening lives after retirement, in a society with less and less workers and taxpayers to support the retired. The entire system began to unravel.

Tax Avoidance

Limiting the universal system to a social safety net for the needy, governments instituted schemes designed to wean people off the public teat into personal retirement plans. Companies closed DB plans to new employees or converted them into DC schemes.

In the 1970s, citing pressures in the social security system and low saving rates, the U.S. government introduced individual retirement accounts (IRAs) with tax incentives. IRAs did not catch on, and the government introduced further concessions. Under Clause 401(k), workers were allowed to contribute cash bonuses to their IRAs on the basis that they could delay the tax on them.

In 1980 Ted Benna, while restructuring an employee pension fund, wondered whether regular income could be sheltered in the same way under the vaguely worded clause. The Internal Revenue Service agreed with Benna, triggering an explosion of retirement plans that allowed employees to contribute a part of their before-tax earnings to retirement savings. Similar retirement arrangements were introduced around the world, transforming individual finances and promoting populist capitalism.

Corporate pension schemes and individual retirement portfolios created vast pools of money that had to be invested. U.S. 401(k) accounts alone now hold close to $3 trillion, with annual inflows of hundreds of billions. Globally, close to $30 trillion is held by pension funds. The simple idea of providing for retirement expanded into a vast industry of consultants, actuaries, financial planners, and investment managers. In the feeding frenzy, after deduction of all fees and expenses, there was less and less left for the golden years.

Risk shifted from governments and companies back to the individual. If the funds underperformed, then retirements were not golden but silver or copper. If the employer went bankrupt, then the employee might not receive their entitlement where the plan did not have enough money. Enron’s employee pension plan invested over half its money in Enron stocks. When Enron filed for bankruptcy, employees suffered a double loss, losing not only their jobs but also their retirement savings. Grief counselors were called in to help employees come to terms with their bereavement.

Even if the entire plan works, under the DC schemes now common, there is no guarantee that the contributions and investment earnings will be sufficient.

For example, assume that you currently make $50,000 per year ($962 a week). Assume that your income rises by the rate of inflation (3 percent per annum), you have a working life of 40 years and you save 10 percent of your income ($5,000) each year. If you earn 6 percent per annum consistently over time, you will have around $1.2 million at retirement. If prices have gone up at 3 percent per annum, then what costs $1 today will cost $3.25 40 years in the future. The $1.2 million is only worth around $370,000 in today’s money (around seven times your annual earnings).

You can draw an income equivalent to $25,000 (half your current income) adjusted for inflation for 20 years after you retire. You can’t afford to live longer or better. You will have to focus on the have-tos rather than the could-haves, should-haves, or would-haves. If your investment earnings are 1 percent lower (5 percent per annum) then you can draw only the equivalent of $18,000 (36 percent of your current income). If you save 1 percent less each year, then you have only $22,000 each year (44 percent of your current income) to live on. There is no margin for error.

Japanese Curse

Japan is doubly cursed. The Japanese live a long time, and since 1989—when the bubble economy collapsed—interest rates, stock, or property investment returns have been microscopic.

Frugal Japanese saved a large portion of their income to try to provide adequately for their retirement. Retirees ran down savings or joined Mrs. Watanabe in speculating on foreign currencies and exotic financial products offering higher returns.

There was a boom in pokkuri dera, especially in the ancient capitals of Kyoto and Nara, shrines where older Japanese go to pray for a quick and painless death. Financial worries were a factor in one-fifth of suicides. Jumping in front of trains proved a common means for ending one’s life—but Japan Railway charged families for the cost of the inconvenience and cleaning up after a suicide.

Inability to get welfare and inadequate pensions led to the rise of neo-geriatric crime. One 70-something invalid using an umbrella as a makeshift walking stick robbed a Nagoya convenience store of ¥50,000 ($500) at knifepoint. Increasing numbers of elderly Japanese resorted to crime in the hope of being incarcerated, receiving free accommodation, free food, and the company of people their own age. The increase in pensioner prisoners required special wards fitted with metal walkers and support rails appropriate for senior citizens.

Legendary Japanese longevity had another, darker side. While trying to track down a citizen to present him with an award for living well past 100 years, Japanese authorities discovered the man had been dead for decades. His relatives had stored the body in their apartment, hiding news of his death, to continue receiving his pension, which was essential to support the surviving family members.

In the aftermath of the global financial crisis, falls in the value of retirement saving and low returns on investments revealed a Japanese future for the retirees of the world. A policy of low interest rates robbed retirees reliant on earnings on their savings perversely when the economy cried out for spending. Banks benefited from the massive subsidy, borrowing for almost nothing earning significant margins from lending out the funds or simply buying government bonds. A deliberate policy of creating inflation was designed to transfer wealth from savers to over-indebted borrowers.

Bank of England deputy governor Charles Bean advised:

Savers shouldn’t necessarily expect to be able to live just off their income in times when interest rates are low. It may make sense for them to eat into their capital.... Very often older households have actually benefited from the fact that they’ve seen capital gains on their houses.¹⁹

Retirees should simply sell their homes, which held most of their accumulated savings, and live in a public park consuming their savings.

The God of Our Time

Thomas Friedman, the globe-trotting journalist and confidant of anyone important, embraced the age of capital:

Your parents probably had very little idea of where or how their pension funds were invested. Now...workers are offered a menu of funds, with different returns and risks, and they move their money around like chips on a roulette table.²⁰

The bit about the roulette was correct.

Money even invaded the most intimate human acts. Two people are depicted having sex in Roy Andersson’s film You the Living. A thin man is portrayed mounted by an overweight woman, wearing a Bismarck military helmet. During the entire sexual act, the man talks about his investments. He invested his savings and extra earnings from playing the tuba at funerals in mutual funds recommended by his bank. He has lost 34 percent of his investment. His pension is going to be lower than he expected. Throughout the entire scene, the woman astride him moans in carnal ecstasy.

Around 2002, a developing country defaulted on its debt. Following protracted negotiations, agreement was reached that the bad debt would be replaced with a smaller amount of new good debt, with all investors losing around half their original investment. The country’s finance minister, accompanied by a vast retinue of assistants and bankers, embarked on a road show to sell the deal.

In Tokyo, the meeting attracted a vast throng of aged Japanese retirees, who had invested their savings in the defaulted securities, on the recommendations of financial advisers to earn interest rates higher than those available in Japan. At the end of the minister’s presentation, a frail, ancient Japanese woman stood up and spoke. In a quiet steady voice, she explained the hardships that the loss had caused. She wanted to know “whether there was any chance she would see any of her money before her life ended.”