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 Originally Posted by OngBonga
Yeah this is where you show you're equally as deluded as I am, only difference is I'm willing to admit it. The banks are not getting their shit together, they can't. All they can do is print more money, but that just gets your nation into more debt. The Federal Reserve prints more money and LOANS it to America. The Federal Reserve is a corporation, a private company. So more money goes into the system, but more debt is taken on, and thus the interest becomes higher. Your nation is bankrupt, as is ours. As soon as oil is traded in another currency, collapse ensues.
I hope I'm wrong and you're right. I'm not convinced though. I suspect that if I had a better understanding of what's actually going on, then I'd be able to explain better why it's fucked. But I am absolutely convinced it's fucked. How can you sit there and say that all is good when our nations sink further and further into financial oblivion?
You're in luck. If you were right, interest rates would be running high. But they're not. Inflation would be running high, but it's not. In fact, one of the biggest problems (probably the biggest problem) in the economy is that inflation is not high enough. The proof is in the pudding with Europe. The EUR is a disaster because it imposes monetary unity without fiscal unity, and the ECB, which is run basically by Germany and France, won't inflate because they don't need to even if all the other EUR countries need it desperately. This has caused the Euro zone to shrink and shrink and shrink. Fortunately, the ECB and Euro governments have recently begun to see the problem they've created, and they might start fixing it. Frankly, I don't think it will be solved for a long time because Germany has control and will not put up with much inflation, but maybe they will stop the shrinking.
Do not think of national debt of a country with its own mutli-sector economies and currency like you do household debt. It's a really complicated issue I don't fully understand and don't want to get into. Regardless, several different countries are bosses of the global economy in ways that their currencies cannot default without complete catastrophe, which means they won't. Additionally, the threat of default isn't even evident due to things like interest rates. Everything you've heard about debt and hyperinflation and whatever is simply false. Beyond that, central banking policy is the alpha and omega of economies. This may sound like a joke to you, but it's the furthest from it. Check out this graph
What you're looking at is a paradigm shift in economies, one based purely on central banking policy. Basically, during the gold standard, every decade was rife with massive inflation and massive deflation. This was catastrophic for business and labor. Then after the Fed dropped the standard and started trying to maintain inflation at about 2%, everything smoothed out greatly. It hasn't been perfect, mostly as you can see through the commodity supply shock of oil in the late 70s, but it is a light year ahead of the previous era. Anyways, the same sort of principle applies to a shift from the central banks allowing inflation to targeting inflation. We are currently likely moving to an economic paradigm where central banks are making sure that the level is targeted, and thus shifts in NGDP growth are minimal. This would not only have kept the Great Recession from happening, but it will push employment to full and keep wages rising in perpetuation in ways that the world has not previously experienced
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