MInTheGap

Standing in the Gap in a Society that's Warring with God.

Are We In a Depression?

October 7th, 2011 Visited 2333 times, 1 so far today

benjamin 251

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.


Image from Stock Exchange used under the Standard Restrictions explained at the link.

Comments

7 Comments

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  • John Hunter says on: October 7, 2011 at 5:23 pm

     

    I don’t think we are remotely close to a depression. Long term unemployment is very bad now. But we have a very distorted view of history if we think this is close to a depression. The economy is actually growing. We even added over 100,000 jobs last month. We have been adding lots of jobs on average each month. Not nearly as many as we need to add to provide jobs to all those who lost them. But there is a big difference between a slow growth economy adding too few jobs and a depression. We are not even in a recession.
    John Hunter´s last post ..Mortgage Rates Fall Under 4%

  • reyna says on: October 8, 2011 at 2:57 am

     

    I think you are over reacting to your countries economic situation. You are not on the verge of depression, it is still a long shot, of course everybody is doing there best to raise your dollars, it’s been your pride and the world is looking at you. Even we, Asian countries are always looking at your dollars since we are sending much of our labor force in other countries which the means of pay off is dollars.

  • ashley says on: October 12, 2011 at 12:03 am

     

    If we think this is close to a depression. The economy is actually growing.But we have a very distorted view of history if we think this is close to a depression.
    ashley´s last post ..long island psychologist

  • Anna says on: October 17, 2011 at 5:18 am

     

    Denying reality is pointless, we should all see what we can make out of this. Every depression is followed by growth.
    Anna´s last post ..Porcelain veneers cost uk more than expensive porcelain plates.

  • Klara says on: October 18, 2011 at 4:55 am

     

    i don’t believe the politicians anymore. they handle this recession is a bad way i think. or maybe just the communication is wrong, i don’t know, i am not an expert in these financial things. i only see that the people feel always like their leader had to lied to them. in my country (germany) it is so actually. and in other states of europe, i mean greece or portugal, the lies were so strong, that these countries will be bankrupted soon. it’s a shame, politicians sold the lives of their people.
    Klara´s last post ..Ohrenkorrektion: die Behandlung

  • Anna says on: October 21, 2011 at 10:04 am

     

    The Depression is one of the modern illnesses. I think that more and more people are depressed because our day is more stressful than before, we are always thinking about work and we do not enjoy:( We have to think about ourselves.
    Anna´s last post ..Why is having sensitive tooth complains such a sensitive topic?

  • malunggay56 says on: November 5, 2011 at 9:01 pm

     

    I don’t believe the politicians anymore. they handle this recession is a bad way i think. or maybe just the communication is wrong, i don’t know, I am not an expert in these financial things. | 😛
    malunggay56´s last post ..watch free movies online

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Standing in the Gap in a Society that's Warring with God.

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