As more and more of the so called experts begin to say what I’ve been saying for the past 2 years, “The Recession is NOT over, it is merely taking a rest while it builds itself for an even worse comeback” it is clearly evident that we need to rethink the nature of Capitalism itself.
Capitalism as we know it can not and will not survive. Tinkering with various aspects of the system such as bail outs for some companies while others are allowed to perish is no solution. Juggling the money supply only creates conflict as each country strives to gain the upper hand. Reducing interest rates to encourage consumers to buy, buy, buy, has failed to achieve the desired results.
Bailing out the biggest offenders in each crisis on the principle that they are too large or too important to be allowed to fail only encourages them to be more irresponsible with the knowledge that the taxpayer will ALWAYS foot the bill for their avarice and incompetence. By declaring that some corporations are exempt from the natural penalties of mismanagement while others are allowed to perish defeats the whole concept of Capitalism, for by protecting the largest offenders who are in fact the very corporations that cause the economic collapse in the first place, we GUARANTEE more of the same on an even larger scale, until finally even the government will not be financially capable of bailing them out with the ultimate result of the mighty United States of America facing bankruptcy itself. The necessary result of such a bankruptcy would be the collapse of all of the major economies on the planet followed by world wide depression, the likes of which humanity has never experienced in all of history.
Increasing the money supply is a fool’s game. Its only possible purpose is to shift the burden of fiscal irresponsibility onto other nations and force them to pay for our mistakes. Anyone with even a substandard level of intelligence can see that printing more paper that has no backing in any tangible way must result in the value of that money being diluted. This dilution of the value of the dollar is called inflation and is the necessary result of this procedure. What inflation means is that everything we purchase costs more money. But you say we’re not experiencing inflation. I disagree. We have only offset the results of inflation by exporting tens of thousands of good jobs to offshore underdeveloped nations where the cost of labour and other factors of production are a small fraction of domestic expenditures. This has resulted in holding prices of goods down, but there Is a price to pay for this policy and we are paying it with ever increasing unemployment levels. The net effect of increasing the money supply is massive unemployment that can never be reversed. As unemployment rises, we experience an overall decrease in buying power in the general population that in turn reduces retail sales on a massive scale causing the collapse of large and small retailers alike. As these retailers collapse there is a domino effect of even more unemployment and a further reduction in the consumer’s buying power and thus even lower retail sales numbers.
In order to increase buying power and encourage more conspicuous consumerism, interest rates have been reduced to the lowest levels in half a century and still retail sales are dropping through the floor. We are now seeing a new and even more dangerous trend. Consumers are being paid to buy. There are multitudes of cash back and other incentives that actually put money in our pockets for being foolish enough to increase our indebtedness which is already far beyond our ability to pay, effectively creating net interest rates on purchases that approaches negative levels. Governments instead of encouraging the population to increase savings and pay down debt are suggesting that we plunge even further into indebtedness. There can be only one result to this fool’s paradise; defaults in payments, personal bankruptcies followed by even more corporate bankruptcies and eventually national bankruptcy.
All of these and all of the rest of the quick fix solutions are merely panic induced irrational responses to the various symptoms of the disease that threatens to kill the patient. They never have had any permanent solution as evidenced by the fact that the world consistently and periodically falls into recession and each recession is more severe than the preceding one. The second stage of the recent recession when it materializes will most certainly be the worst that the industrial age has ever encountered and unless a radical shift in the very nature of Capitalism is implemented immediately, the world faces a Depression that will make the 30’s seem like boom times.
What can be done to avoid this crisis?
First and foremost, it is imperative to understand that there is plenty of money and more than adequate resources available to prevent a cataclysmic collapse of the global socio/economic system. What is required is a redistribution of these resources eliminating the current situation where less than 5% of the world population holds 95% of the wealth. With this concentration of wealth, it is inevitable that there just isn’t enough to go around for the rest of the population and people no longer have the means to purchase the goods that make the current system stay afloat.
Redistribution of wealth in itself will not prevent the collapse. It will only postpone it unless strong rules to the Capitalism Game are put in place to ensure that never again will such an imbalance be possible. A reassessment of how we value each person’s contribution to society must be made. No economic system can survive with the inequities that we currently encourage. A system where someone who merely entertains us can earn millions of dollars annually while a person who provides crucial services such as transportation or construction workers for instance barely earns enough to survive can never survive itself. An equitable earning scale for all occupations is the key to creating a system that can endure.
These recommendations may sound utopian and impossible to achieve, but the alternative is the complete and irrevocable collapse of the entire socio/economic system that we live under. It behooves us to do the impossible if we are to survive.
The greatest strength of humanity is its ability to adapt when threatened. Adaptation is no longer a luxury that we can afford to ignore.
See: The recovery illusion Bank regulators have learned nothing Carney says headwinds will slow recovery The great inequality debate Canadian companies put machines before jobs
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