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MarkGB 

"Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world" - Henry Kissinger

and yet...

"Sooner or later everyone sits down to a banquet of consequences" – Robert Louis Stevenson

Martin Wolf says we're trapped in a cycle of credit booms - he's right

In response to an FT article by Martin Wolf on 7th October 2014, entitled 'We are trapped in a cycle of credit booms'

http://www.ft.com/cms/s/0/1a9f058e-4d43-11e4-bf60-00144feab7de.html#ixzz3FUTLliE7

Bravo Mr Wolf!  An article about the crucial issue of 'debt' is a refreshing change from the huge tonnage of scribblings the paper produces on aggregate demand. 

We have indeed made a "Faustian bargain with private sector-driven credit booms" Mr Wolf. But it's worse than that - debt is inevitable in a system where money is created as debt and needs ever expanding debt to prevent it from collapsing on itself.  

We have made a Faustian pact with a banking system that waves credit into existence, charges people interest on it, pockets the spoils in the good times, and gets it's lackeys in the government to fleece the plebs when the Ponzi scheme collapses, as it inevitable does. The root cause of our troubles is a fiat based monetary system with fractional reserve banking. It is sleight of hand and legalised theft of the highest order. It will collapse, as it has done every time in history it has been tried.

As for the US coming closest to getting it right, I think the US recovery is a chimera. Take the jobs report for example - 248k jobs sound great, until you look under the bonnet to see what's there - far too many part-time, minimum wage jobs for older people. There are other disturbing statistics in the report that the talking heads on CNBC and Fox don't seem to like talking about: For example: the civilian labour force for September is recorded as 155.9 million. In October 2008, just as the crisis was taking off, the figure was a million fewer at 154.9 million. Great you say, that's back to where we were! No it's not, for the simple reason that during the same period the working age civilian population rose from 234.6 million to 248.4 million; nearly 14 million. A ratio of 14:1 is not great by any standards - so never mind, we won't talk about that!

The debt problem has been brewing for decades, since the breakdown of Bretton Woods in 1971; in the nineties it reached the bend of the 'J' curve, since 2008/9 it has been exponential and I think we are now approaching the finale. It's been a long running serial, with central bankers as the star players -  let's call it Debt Trek:

Debt...the final frontier…these are the voyages of the central bank 'Kill Enterprise'. Its five year mission: to explore strange new monetary tools, to seek out new zombies and new bubbles, to boldly go where no man, and now no woman have gone before.

You are right Mr Wolf - "A great deal more trouble surely lies ahead".

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