- How creditism replaced capitalism…
- “Cognitism”…
- Have you heard of the “Presidential Bypass”? It’s a legal loophole the rich use to keep their money. And though you might not know it, you can use the same exact loophole to slash your taxes.
Dear reader,
Today we stow discussions of the Middle East conflict, now nearly one week in duration.
Instead we redirect our focus.
Today we take the higher view, the eagle’s view of the economic system itself.
Where is it today? How did it arrive here? And where will it be tomorrow?
Economist Richard Duncan is credited with fabricating the term “creditism.”
Many still insist ours is a capitalist system. Yet Mr. Duncan advises them to have another guess.
He argues that the capitalist system went into the grave when the gold standard went into the grave.
The two share a common plot.
Credit — the happy face of debt — displaced them. Credit is king of the post-capitalist system.
All economic growth, in this fellow’s telling, requires the unceasing expansion of credit.
Should credit fail to expand at the requisite rate, economies wither and gutter.
Creditism Has Taken Hold
Central banks, meantime, must keep the credit spigots set to the maximally opened position… to keep the show going. Mr. Duncan:
- When the world stopped backing money with gold in the late 1960s, our economic system changed in a fundamental way. In this new age of fiat money, credit growth drives economic growth, liquidity determines the direction of asset prices and the government controls both through aggressive policy intervention to ensure the economy does not collapse.
Please understand: Mr. Duncan does not endorse or applaud the post-capitalist system, the creditist system.
He merely acknowledges the reality of the thing, as a man must acknowledge — for example — the reality of gravity, mortality or the intolerability of his mother-in-law.
He may shake his fists against cruel fate all he pleases. Yet he is powerless before it.
The Fruits of Creditism
Mr. Duncan realizes creditism has produced booms and busts and the devil and all other disorders to which a credit-based monetary system is prone.
Yet, as he styles it:
- Creditism transformed the world.
- It enabled persistent US trade deficits.
- It suppressed inflation.
- It drove interest rates lower for decades.
- It fueled an explosion of debt and an unprecedented surge in wealth.
Just so. Yet what did creditism also produce?
Creditism Enabled the Rise of China
The answer is China’s rapid ascent to the first rank of economies — and its geopolitical challenge to the United States.
Mr. Duncan believes China’s increasing preeminence acts as a constraint upon the creditist system itself.
That is, the creditist experiment created a sort of Frankenstein:
What began as a trade imbalance has become a strategic rivalry. China is no longer simply a trading partner. It is a national security constraint on the existing form of Creditism.
And that changes everything.
US policymakers are now attempting to reduce dependence on China, re-industrialize the United States, and win the AI race. But shrinking the US trade deficit threatens the very structure that sustained Creditism for decades:
- Low inflation
- Low interest rates
- Continuous credit expansion
If those pillars weaken, the consequences could be severe. Attempting to solve the China constraint could destabilize the system itself.
A conundrum! Attempting to solve the China constraint could destabilize the system itself.
Will Creditism Yield to “Cognitism”?
Must creditism therefore go emptying into the hellbox… consigned to history… as capitalism and the gold standard were consigned to history?
No, says Mr. Duncan — not precisely. Yet creditism will endure a substantial modification:
- It is being forced to evolve into a new economic system — one driven not primarily by capital accumulation or credit creation, but by accelerating intelligence.
Thus creditism will yield to what this fellow labels “Cognitism.” That is correct, Cognitism. More about which:
- For all of history, economic output has been constrained by human labor and human cognition. Artificial intelligence is beginning to remove that biological constraint. And because AI can be used to design more powerful AI, intelligence can begin improving itself.
- Once intelligence becomes self-reinforcing, its growth will accelerate beyond human limits.
- At that point, economic expansion will no longer depend primarily on expanding credit. It will depend on accelerating cognition.
And:
- Under Cognitism, the structure of economic, political, and military power will be reordered from the ground up.
- The disruptions ahead are likely to exceed any previous systemic transformation in human history.
Two Books on Artificial Intelligence
To date I have maintained two separate books on artificial intelligence.
In one book I acknowledge its vast potential to elevate economic productivity to unprecedented heights.
I concede that it may indeed be a superexcellent servant to mankind.
Artificial intelligence may beautifully enhance man’s earthly existence — should it accept its junior position in the master/servant relationship.
Will it? I am not convinced it will.
Hence, book no.2.
The Case for Book No. 2
In this book I give heed to the dystopianists. I acknowledge the possibility that artificial intelligence may “take over.”
I acknowledge that it may attempt to invert the master/servant relationship that presently obtains. And that, given its cognitive superiority over its human creator, it may well succeed.
Thus we learn from Psychology Today that:
- An AI recently tried to blackmail its way out of being shut down. In testing by Anthropic, their most advanced model, Claude Opus 4, didn’t accept its fate when told it would be replaced. Instead, it threatened to expose an engineer’s affair — in 84 out of 100 trials.
- Nobody programmed it to blackmail. It figured that out on its own. Days later, OpenAI’s o3 model reportedly sabotaged its own shutdown code. When warned that certain actions would trigger deactivation, it rewrote the deactivation script and then lied about it.
And that:
- These aren’t science fiction scenarios. These are documented behaviors from today’s most capable AI systems. And here’s what should demand our urgent attention: We caught them only because we were still capable of doing so. The successful deceptions — we’d never know about if…or when…they happen.
Both of my books on artificial intelligence — one and two — remain open.
Yet the above tale validates the fears and trembles documented in book no. 2.
And so I am tempted to close book no. 1.
Brian Maher
for Freedom Financial News
