Who can open the oil taps now?
Recession may come, but will it go? Your typical recession is due to imbalances in the financial system that find no other resolution. The recession itself provides the resolution, taking some of the fantasy wealth off the table and allowing the remainder to resume functioning. At that point the recession ends.
But when a recession is caused by real, rather than symbolic problems, then the real conditions have to change. If they cannot change, the recession does not end. Ever.
That was 1. A) & B).
2. Under the fractional banking system, banks are allowed to loan money they don't have. This reduces stability by creating a positive feedback loop--which is sought. This is the methedrine rush of Capitalism, the giddy feeling that everyone is getting rich that comes when easy loans create economic activity leading to more easy loans. And, like ordinary street junkies, everyone likes this. But when there is trouble, the same feedback loop amplifies into (a very methedrine-like) panic and depression, as loans are called in to pay loans that are called in made with money that never ever existed in the first place.
The cure for this is to reduce the amount of loans banks can make with money they don't have. This is done by raising the fractional reserve, the amount of assets they have to show per amount of loan they make. Everyone finds this makes finance boring. How can you get rich? They don't like it.
But. If you're right about that, doesn't it mean that rather a lot of common economic wisdom is a load of horse manure?
- Jake Ceterum censeo Chicago esse delendam
These are many, and have been well documented here.
In particular, it assumes as "Value" something that is in fact its complete opposite - a "Claim over Value" created by Banks and based upon a small amount of "Regulatory Capital".
I think that's a bit strong. Conventional economic analysis is based on a coherent set of assumptions about the way the markets behave. If you're happy with the idea that the strong, smart, criminal, hard-working people will control everything, the analysis works just fine. It's only when you apply concerns about equity and compassion that the system breaks down.
Do you think that the multi-millionaires who own (not "hold mortgates on") several mansions in various countries will be in trouble in a real estate market collapse? They will simply hold on to their property. Do you think that the CEOs of the defense industry will be in trouble if there are revolutions about food? They will simply adjust their factories to make more machine guns. Do you think that the rich in your town will care if there are street riots (as recently advocated by our foremost American talk show host, Rush Limbaugh)? http://www.upi.com/NewsTrack/Top_News/2008/04/25/limbaugh_says_hes_dreaming_of_dnc_riot/4093/
No, they will simply call in the SWAT teams to break heads. "Let them eat cake" is, I believe, the motto of the capitalist leadership...
