- Top Features:
- War Room
- Glenn Greenwald
- Broadsheet
- Joan Walsh
- Camille Paglia
- Since You Asked
- Follow Salon:
Read other letters about this article
From Spain we see words by an economist with a funny first name. Come to think of it, if one loves old cars then his last name has meaning also.
Anyway, he says:
The severe financial crisis and resulting worldwide economic recession we have been forecasting for years are finally unleashing their fury. In fact, the reckless policy of artificial credit expansion that central banks (led by the American Federal Reserve) have permitted and orchestrated over the last fifteen years could not have ended in any other way.
The expansionary cycle that has now come to a close was set in motion when the American economy emerged from its last recession in 1992 and the Federal Reserve embarked on a major artificial expansion of credit and investment, an expansion unbacked by a parallel increase in voluntary household saving. For many years, the money supply in the form of banknotes and deposits (M3) has grown at an average rate of over ten percent per year (which means that every six or seven years the total volume of money circulating in the world has doubled). The media of exchange originating from this severe fiduciary inflation have been placed on the market by the banking system as newly created loans granted at extremely low (and even negative in real terms) interest rates. The above fueled a speculative bubble in the shape of a substantial rise in the prices of capital goods, real-estate assets, and the securities that represent them and are exchanged on the stock market, where indexes soared. ...
He goes on to use his native Spain as an example and gives a decent economic education in a relatively short essay. A good read for those who are not expecting the next president to wave a magic wand and save us all.
more with a click on the sig
or
http://mises.org/story/3138
