Wednesday, September 09, 2009

Alan Greenspan: Debt crashes happen. Get used to it

Alan Greenspan predicts that there will be another financial crisis sometime.

Greenspan is the ex-Federal Reserve chief who failed to see it coming. Why will we have another one? Because of "...the unquenchable capability of human beings when confronted with long periods of prosperity to presume that it will continue."

Unquenchable? How about quenching it with the well-known human attribute of reason? How about considering the axiom that it is impossible to take forever from a finite source? Or that it is impossible to expand forever into a finite space?

These self-evident truths are not truths for mainstream economists, because they challenge the belief that the economy must always expand; otherwise it will collapse. Just like a Ponzi scheme.

They think the recession is all over. Maybe, maybe not. If it is, we can go on our way rejoicing, with the financial system substantially unchanged, substantially unregulated. The only difference is that the per capita debt on the shoulders of every man, woman and child in the UK amounts now to something like £100,000.

Thank you, economists everywhere. Thanks a bundle.

No comments: