What has occurred over the last 20 months is the failed attempt at building a bridge between waves. What Benny and the Jets has failed to realize in his study of the Great Depression is that the bridges would have to go up and have infinite power to sustain the system. The only way Benny could be successful is if the bridges are going up at the rate that is exponential to meet the demand of the underlying equation being used in the system.
Benny and the Jets would have to be God or God-like or maybe even have more power than God to sustain the system. They can definitely can and do have influence and effect the rate of decline but the equation always wins in the end.
The underlying equation is still demanding additional credit without an increase in production, nor do humans have the ability to supply the equation exponential growth long-term, unless your idea of long-term is 60-80 years.
Don't you think that Bernanke knew this already and is simply "attempting" to make it look like a solution is being tried?
ReplyDeleteI actually think Benny BELIEVED the, "lender of last resort BS".
ReplyDeleteBenny is now hoping for a miracle and playing make pretend that the system is not in a death spiral.
The lie has never changed, it's the same lies humans have been telling to one another for centuries.
Simple put, Benny was wrong... there simply is no one left to "lend to" in their "lender of last resort BS".
so why can't the fed lend to the US govt at an ever-expanding rate, even if there aren't any private-sector borrowers?
ReplyDeleteWell, they tried that in Zimbabwe.
ReplyDeleteNow the production of paper money or digital money which USE TO represent the underlying "credit" of the Zimbabwe system is now ZERO.
If you can fund your own credit, there is no reason for a credit system. Credit creation would go to virtually zero and it doesn't matter how many digits are on a computer screen.
well, it does put off the denouement for some time. isn't that what QE is all about and do you think they will persist in trying this route?
ReplyDeleteThe QE in Japan has slightly helped postponed Judgment Day there. Japan has had the luxury of having the rest of the world available for it's supply and demand, without the rest of the world Japan would have collapsed into a heap of mess long ago. I expect Japan to be in the downward spiral for 70-100 years from 1989-1990.
ReplyDeleteCentral banks can do QE to help around the edges when they become the majority of the market then it becomes a serious issue. If Central Banks can do QE forever at an exponential rate, why would anyone have to even work if in fact it does work?
Central Banks have influence, and can greatly influence the market... as you saw with Fannie Mae and Freddie in the summer of 2008... if the government starts becoming the whole market... well then there will be no market. The bazooka backfired right in Paulson's face.
If you can issue your own debt and fund your own debt, why would you issue it to start with?
Think about what "credit" is and isn't. Is "credit" pieces of paper or even digits on a computer screen? Does "credit" really even exist?