Interest rate cuts will only worsen the debt crisis – and the coming recession

OK, so let’s get this straight:
Low interest rates and easy money in the States (and Britain, and almost everywhere) led to a crisis in the ‘sub-prime’ mortgage market, which has brought on fears of a recession in the States (and everywhere). The Fed’s response, as Wall Street cottons on to the danger of recession, and tumbles? Lower interest rates by three quarters of a percent, a week early!
Are these people complete imbeciles?
Let’s get the next part of the story straight (i.e. what will happen over the next several months/years):
Eased credit in the States leads to a further bubble in the ‘sub-prime’ mortgage market (and probably also a sudden surge of inflation), which in due course will lead to a still worse crisis, and thus to a real recession…
The U.S. and U.K. nowadays are debt-ridden — debt-sodden, debt-addicted — countries, mortgaged to the hilt. The Fed has just redoubled that. It truly does beggar belief.

We are living beyond our means. It is time to get real. It is time for some thrift. It is time to stop believing that economies can keep growing, and debt keep rising, without a reckoning.
Through what they have done today, the Fed have simply blown a new, bigger bubble that will really bring the whole house of cards tumbling down a little down the line, far worse than if they had done nothing.
Thank God Mervyn King doesn’t seem as much a fool as these fantasists who believe that they can con themselves and everyone else into eternal debt and eternal growth. But when America snots all over the world, as will happen just a little later, we may all yet catch pneumonia.

2 thoughts on “Interest rate cuts will only worsen the debt crisis – and the coming recession”

  1. Not sure about the “snotting” (?!) but too right, you can smell the panic.

    You’ve probably seen the film “Money is Debt”, Rupert, but to anyone who hasn’t yet, it’s well worth watching, as it explains fractional reserve banking very entertainingly. Fractional reserve banking is the system that has been conjured up to allow a tiny elite to profit from lending out at interest, vast sums of money which does not exist!

    The image of a row of bankers blowing up the ever larger balloons of debt has really stuck in my head.

    The film has some terrific quotes from the elite who have knowingly been perpetrating this huge confidence trick against us, and makes clear the inherent connection between the banking / debt / usury con, and environmental destruction.

    Kenneth Boulding summed it up; “anyone who believes exponential growth can go on forever is either mad or an economist.”

    My only gripe is that it took me a long time to download on dial-up.

Leave a Reply

Your email address will not be published. Required fields are marked *