The word “depression” carries with it such huge baggage that people will do everything they can to avoid it. The problem is that it shouldn’t be feared, as it’s part of the normal cycle of finance—there has to be a contraction just as there is an expansion. Trying to deny reality here is pointless.
The question that we are faced with is:
Do we embrace this part of the cycle, or try to avoid it and end up making it more painful?
Our leaders are currently doing the latter. They are inflating the dollar, they are trying to extend credit. They are attempting to influence the economy strictly on the supply side, where it is the demand side that creates jobs.
Worse, all these attempts to heal the economy through “Quantitative Easing” is actually making this worse:
Of course, more quantitative easing isn’t the right thing to do if the desire is to see the global economy return to real economic growth in the shortest possible period of time. Expanding the money supply, however one wants to label it, is the precisely wrong thing thing to do and is an action driven by the banking industry’s allegiance to a false economic model because the correct action will significantly increase the likelihood of widespread bank failure. But if one simply goes back to basic economic theory 101, it’s not hard to see why neither Bank of England’s current action nor the Federal Reserve’s previous actions can possibly work. Since it is the price of money, the Law of Supply and Demand dictates that historically low interest rates mean there is either (a) insufficient demand for money or (b) an excess supply of money.
How, one wonders, can increasing the supply of money be expected to either (a) increase the insufficient demand for money or (b) reduce the excess supply of it? [Dancing around the D-word]
The problem is that sometimes you have to take apart what you’ve constructed in order to fix the problem. You have to rip out that wall to repair the structure or re-record that video because you goofed it up the first time. Trying to continue to fix things with the present system, with all of its problems, still intact will not work.