Busted: Bankers and The Global Economy

January 6, 2009

Another Great Depression?

Milton Friedman persuaded many economists that the Federal Reserve could have stopped the Depression once and for all by providing banks with more liquidity, preventing a sharp fall in the money supply. Thanks to the economic practice of Ben Bernanke, Friedman has been proved incorrect. Preventing an economic depression is a mind-numbing, difficult affair, likely because a depression is systemic in nature, sometimes in ways mere mortals often fail to grasp.

darling-obamaNevertheless, liquidity has done little to quench the economic fires of recession this round. Banks aren’t lending. Businesses and consumers aren’t spending. The nation is in a vicious or self-feeding cycle. Barack Obama prophesied this week that “we could see a much deeper economic downturn that could lead to double-digit unemployment.” You think?

Do we throw money at the situation or hold back the horses and let nature hold its course? So far, the timing of economist and politicians has done little to stem the tide. More than a year into the most spectacular financial calamity in modern experience, nothing has been done to change that, or any of the other issues that led the nation to this point in the first place. The government has tried all manner of provisions. Consistency hasn’t been a strong suit. Meanwhile, banks are sitting on all your hard-earned taxpayer money designed to prevent a financial event that may be unavoidable considering the limited knowledge and human resources at hand. Even the old classic economists are being thoroughly tested. ~ E. Manning


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