brass neck said:
I realise I'm a money simpleton..so bare with me BUT
If every country in the world is feeling the pinch, every economy is bolloxed, every country is heading down the swanny. WHY cant every country just agree to rip up all debts, get rid of all present monetary devices, burn all current money, print new money, set up a new system, and start again. A little like pressing reset on the games machine. Surely the problem the world is facing isn't due to owing money, its due to money not moving about. just start again...OK if a few banks lose out...who cares!!!!!!
The reason money isn't moving about is precisely because of people owing, and not being able to pay off, debts. Aswell as general economies (particularly the USA's economy - seeing how the crisis began there) being unsustainable 70-80% service based economies.
A new monetary policy is needed, banking system etc. Personally I think money needs to be made sound again by some kind of backing - gold, silver etc - to ensure the integrity of the currency and to keep government spending in check. A new decentralized banking system, whereby interest rates are set by the market and not some central "authority" , the Federal Reserve in the USA's case,
Basically we have to do the opposite of what we have been doing for the past couple of decades. Shrink government, and its burden on society, size/spending/power. Restore soundness to currency. Cut taxes massively. Let the market work and allow poorly run businesses to go bankrupt which then allows the more honest and/or competent people to take over. Allow recessions to play out (the reason why this one is so bad is because the US kept re-inflating bubbles, like the .com one etc), cut barriers to competition (ie. regulations) and generally cut back on central economic planning. The Western economies need to rebalance and start manufacturing products to sell. To do this people need to save.
I'd disagree with you that all the worlds economies are bolloxed. Most are, but some, like the Asian economies, have stronger foundations and are much more capable of working their way out of the crisis because they have a manufacturing base. Of course, if they continue the policies of creating "Zombie" banks and businesses then they will be as fucked as we will be. If we all keep rewarding bad business practices by printing up bail outs then there is a much worse crisis heading our way in the next decade.
And writing off debts will not go down well with those who are owed the green ;)
