Smarty_Pants

In the Face of Mounting Pain, Avoid Extremes

"One could argue that a similar consumption-at-any-cos... strategy has been the stock in trade for the past 20 years. But the liquidity injections have lost their power to elevate consumer sentiment."


When increasing consumption is based on borrowing there always comes a time when the borrower cannot afford to meet the payments on the loans. We are beyond that juncture now. There is no way to 'stimulate' spending when nobody can afford the cost of living and debt payments they have now.

This is the fatal flaw in the Keynesian monetary theory our gub'mint practices.

What needs to happen is for people and businesses who cannot afford their debt payments to go bankrupt and liquidate the debt at whatever can be gotten via selling off remaining assets. This will cause the lenders to take losses, but they will get something back and the debt payments will be ended and their drag on economic spending removed.

Unfortunately, the lenders in this case are the big Wall Street banks, and the gub'mint apparently doesn't want to see them to take any more of those losses than they have to. I guess it might adversely affect their campaign contributions or something.

The longer gub'mint acts to prevent the liquidation of outstanding debts, the longer the 'recession' will drag on. It's going to be a while.

Get used to it.