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Return of the GFC : Comments
By Saul Eslake, published 27/5/2010In Europe, investors are nervous, while in China the government wants to put a plug in the country's property pipeline.
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The IMF ,Bank of International Settlements and the US Federal Reserve, just kept on creating more money to bail out a failed financial system.We are now seeing the destruction of the real productive economy to keep alive the derivative scams,credit default swaps and sub-prime debacles.
When we went off the gold standard in the 1970's, the World Reserve Banks created money like there was no tomorrow.When banks create more money that pop increases or GDP,they steal wealth form the rest of the community by diluting their wealth through inflation.Ordinary folk are then on the treadmill of chasing the depreciated value of their work efforts.Eventually the system does collapse.
What really needs to be addressed is the fractional reserve system of banking,that allows the least productive Corporates to feast off the real productive economy.It is this system that has over inflated the values of shares and property.If we reward those who really produce,then the booms and busts will cease to exist and there will be far less poverty.
Greed is destructive because it steals time from individuals to be educated.Working in sweatshops or long hours for your boss reduces opportunity for education and creativity.
We are just repeating the mistakes of the Great Depression ie creating money to delay the inevitable and prolong the downturn.