Machine Learning

WHY DOES THE ECONOMY NEED TO BE REFORMED

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Synopsis

Rickards noted, eventually the aftermath of a coming collapse will follow the current expansion, which has been going on since June 2009 called quantitive easing, a failed Keynesian theory practiced in Japan leading to a forty plus year economic depression. Central banks took the pressure off with money printing, zero interest rates, currency swaps and other guarantees behind the scenes, but the underlying imbalances remain. Debtors hate deflation because they are repaying with expensive money. Likewise during inflation they are paying back money with diluted money with less buying power. During inflation it hurts less to pay down debt. During inflation your paying with dollars with less value than you borrowed with. Deflation puts stress on the banks. The fed job is to stabilize the banks. Therefore the fed fights deflation by increasing the money supply causing inflation. There are only so many ways to fight deflation, however. The natural cure is growth, but extremely high debt loads are likely to c