This crisis is not "solvable" without a depression regardless of what any of them say. It had to be prevented. It is like stepping off a cliff. You had to stop going down the same path that leads to the cliff before you take that final step.
Now, think of that path as being very steep. The further down the path to the cliff, you go, the harder it is to turn around and climb back up the path.
In the 1960's we could have stopped, reformed and maybe had a very mild recession (if done when times were good or a normal recession if we were starting into an economic slowdown.
Each decade after that, the recession would have had to been larger and more pain suffered to get back to sound monetary and economic theories that we base policies on in both parties.
By the 90's it would have taken a mild depression and that was avoided by an unsustainable Tech bubble. In the 2000's we would have had a full blown depression had we not spent and stimulated our way into another unsustainable bubble and now, it will take the worst depression possible which will include a collapsed currency either due to outright default or hyperinflation, like the CBO warned of in their 2009 report to Congress if we try to use inflation to get things under control.
From 1913, on, we have used flawed economic and monetary theories where debt and inflation could be combined to create growth greater than what could be achieved with saving and investing.
This chart from the GEAB LEAP20/20 think tank report says it all about why we needed to do the reforms in the 1960's
Diminishing Return on Debt
From the article
I don't hear the "experts" including the global move a way from the dollar with one "non-dollar" trade deal after another being made. The latest two being China with Russia and Turkey with China. At some time in the next few months to a couple years, we will reach a tipping point. I believe I heard John Williams at Shadow Stats, in an audo interview earlier this month, say we will have a currency crisis within 6 to 9 months. Why isn't there more coverage of these non-dollar trade agreements? Why aren't more people, than some on this site, talking about the risk we keep adding to the dollar?
Naturally, this is just my personal opinion based on the "experts" I read and listen to. However, I believe the history of empires is on my side in that most people in every empire didn't see the end coming to their power and standard of living that the GAO has warned Congress for years, that we will lose either "gradually," or "suddenly." The GAO also says that includes domestic tranquility and eventually national security. I believe, personally, we can put "gradually" to the side and focus on "suddenly," given the continued intentions of deficit spending and quantitative easing.
It is not that the people trying to solve this crisis don't have "good intentions" but that they have already stepped off the clif.
No matter what the FED or Government does, it won't stop us from a major depression. As economist Ludwig von Mises stated, you can do it voluntarily or keep going until the currency collapse.
Since I mentioned the warning from the CBO, I probably should include the other warnings, as well as that one so you can put their warnings in proper context.
Page 16
The large amounts of federal debt that would accumulate under each of CBO’s long-term budget scenarios imply that the government would have to spend increasing amounts to pay interest on that debt. The growth of debt would lead to a vicious cycle in which the government had to issue ever-larger amounts of debt in order to pay ever-higher interest charges. Eventually, the government would need to adopt some offsetting measures—such as cutting spending or increasing taxes—to break the cycle and put the federal budget on a sustainable path.
page 17
As investment was displaced by government debt, GDP would grow more slowly and eventually decline. In the longer run, as the debt continued to grow and unless the interest premium was very large, capital would probably flee the United States, further reducing investment.
Because the textbook growth model is not forward-looking, the analysis assumes that people will not anticipate the sustainability issues facing the federal budget; as a result, the model predicts only a gradual change in the economy as federal debt rises.
In actuality, the economic effects of rapidly growing debt would probably be much more disorderly as investors’ confidence in the nation’s fiscal solvency began to erode. .....All in all, the U.S. economy could contract sharply for a long period.
Page 18
Although an unexpected increase in inflation would let the government repay its debt in cheaper dollars for a short time, financial markets would not be fooled for long, and investors would demand higher interest rates going forward. If the government continued to print money to reduce the value of the debt, the policy would eventually lead to hyperinflation (as occurred in Germany in the 1920s, Hungary in the 1940s, Argentina in the 1980s, Yugoslavia in the 1990s, and Zimbabwe today).
https://www.cbo.gov/ftpdocs/102xx/doc10297/06-25-LTBO.pdf
Again, there are a lot of good people (and some really bad ones) in Congress but, for decades they have been convinced to use flawed economic and monetary theories to base both party's policies on. Take the time we have and prepare for the worst and work for the best.
