The Financial Crisis: Why Current Actions Won’t Work
I put a couple of articles on the back-burner, waiting for a chance to read both before commenting on them. As it happens, this most recent article reminded me a little of this one so I thought it was time to explore them a little further.
Ultimately, the conclusion that both seem to have is that we’re going to run out of taxpayers. And the problem with the financial crisis is that it’s nuclear: we might be able to bail out a few banks now, but we’ll have toxic debt issues related to the bailouts for generations to come.
The solutions offered were mixed. The Reality Sandwich article is really only in ‘Part I’ of a series, but towards the end, they seem to speak fondly of nationalization of the money creation process. This would marginalize the demands placed on all capitalist countries by the financial community to borrow as they print money. Instead, they would simply print money. As someone who warns against the ills of abusing those things that come for free, this solution might create more ill than good. It’s called inflation.
However, inflation only comes when people expect more from their economies. Perhaps if we tuned ourselves to think in terms of zero growth (zero growth of money supply (unless under economic ‘duress’), zero growth of economies, zero growth of wages, etc), it might actually be feasible.
Good luck with that, though.
Enter the Socialist Project, with another lengthy and more current article, focusing mainly on the use of Keynesian philosophy and who’s doing it better. They argue that China and other countries are better positioned to jump-start their economic bodies because they have a healthier attitude towards Keynesianism, but again, I’m concerned that we’ve really missed the point: we no longer have the luxury of infinite growth .
All of these policies, be they monetarist or Keynesian or whatever, simply don’t account for the notion that it’s irresponsible to fashion economies around the principles of endless consumption. At some point, the party has to end. We’ve already talked about the impact that demographics will have on our current situation , but the truth is that we don’t think anyone is listening. There are too many special interests at risk (big banks, big unions, big government, etc etc etc).
What are your thoughts on this situation? What do you think our governments should do to pull us away from financial ruin while trying to also encourage people to have a positive attitude about their futures? Post your thoughts below.