Creating money (quantitative easing) to solve the 1930s problem

It appears that some policy makers are determined to relive the 1930s but this time to get it right.

In the early 1930s the U.S. fed was restricting the amount of money in the economy.  In hindsight we can see that this was the wrong policy.  What was needed was to expand the money supply so people could get on with using the resources which at that time were so abundant. Once more money was created the people went on to fight a major war and then followed up with an unprecedented period of prosperity.

With this in mind central bankers today are trying to create more money with quantitative easing and we are hearing calls to prepare for an alien invasion.

But circumstances are different this time.  We have used up the most easily available of our energy and mineral resources.  Those that are left require a lot of work to extract and this is probably behind our current economic problems.

Rather than trying to create more money and return to economic growth we should be trying to rearrange our economy so that we can cope with negative growth with a minimum of human suffering.



Crises, referendums and impossible questions

Leaders don’t always speak for the people they claim to represent.  Therefore the Greek referendum may be a good idea.

The question is can the financial crisis which is threatening a number of countries around the world be resolved.  One doesn’t want to be defeatist but if we really are using resources at 150 per cent of the sustainable rate, then there is bound to be some serious economic problems.  Is it realistic to think we can beat the odds?

If we can’t beat the odds, should we then be looking at an orderly wind down in the hope we can minimize the human suffering?

Some times there are no answers.

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