Three years after the Mortgage Crisis caused the Great Depression 2.0, we are faced with the prospects of another "recession", joblessness, economic and financial malaise. The government, economists, business leaders and pundits have pulled out all the stops, and today we are little better than we were 3 years ago. The question that needs to be asked by the Average person today is: Is it the "handling" of the economy that is broken, or is it the system?
For 40 year the major industrialized economies have suffered. Iinflation, Stagflation, commodity price shocks, emerging markets, labor unrest, riots, crime, increading wealth disparity, stress and debt. Japan, once the poster boy of technological and manufacturing efficiency has been in a deflationary recession for close to 20 years!!
The solutions offered by the capitalist class have mainly been in two groups: Supply side and demand side. Supply side is basically that the people who invest drive the economy, so cutting taxes to the corporations and the rich will trickle down to the rest of us. The Demand side argues that it is the consumer who drives the economy, so tax cuts for the middle and poor are more effective.
What is interesting is the fact that the major economic breakthrough during this period does not involve taxes at all, it looks at how banking and the monetary system affect the economy. Now this is important since it was precisely the monkey business with the monetary system that cause the 2 great depressions (29/08), so how come no one is talking about how to fix the monetary system?
It is very important to understand that the single most important factor in controlling the economy is the expansion or contraction of the money supply - not taxes, government spending, not even manufacturing. In fact, the absence of serious study or education in how the synthetic economy of money creation affects every one of us is baffling! Milton Friedman said, "Iinflation is always a monetary phenomenon", in fact, the creation and distribution of money is the key determinant of how our economy functions.
The imporatnance of money creation and distribution to capitalism is underline by the very term capitalism, which denotes that "capital" or investment are the key to any economic activity in this system, and earn most oif the rewards. The irony, of course, is that capital today is entirely synthetic, created by corporations, individuals and government through credit. The real defining characteristic of rich and poor is the ability to create synthetic capital to lend out, or to have to borrow it at interest.
Given the ravages oif this system of credit has had on hundreds of millions of people in the last 3 (and really the last 100 years) is it not time to start looking at what really causes recessions, inflation, poverty, crime, riots and even war?