Soros--doing something about bubble economies

[eridani]

http://www.huffingtonpost.com/george-soros/a-plan-for-economic-recov_b_166518.html

The bursting of bubbles causes credit contraction, forced liquidation of assets, deflation, and wealth destruction that may reach catastrophic proportions. In a deflationary environment, the weight of accumulated debt can sink the banking system and push the economy into depression. That is what needs to be prevented at all costs.

It can be done by creating money to offset the contraction of credit, recapitalizing the banking system, and writing off or down the accumulated debt in an orderly manner. For best results, the three processes should be combined. This requires radical and unorthodox policy measures. If these measures were successful and credit started to expand, deflationary pressures would be replaced by the specter of inflation, and the authorities would have to drain the excess money supply from the economy almost as fast as they pumped it in. Of the two operations, the second is likely to prove both technically and politically even more difficult than the first, but the alternative--global depression and world disorder--is unacceptable. There is no way to escape from a far-from-equilibrium situation--global deflation and depression--except by first inducing its opposite and then reducing it.

The size of the problem is even larger than it was in the 1930s. This can be seen from a simple calculation. Total credit outstanding was 160 percent of GDP in 1929, and it rose to 260 percent in 1932 due to the accumulation of debt and the decline of GDP. We entered into the Crash of 2008 at 365 percent, which is bound to rise to 500 percent or more by the time the full effect is felt. And this calculation does not take into account the pervasive use of derivatives, which was absent in the 1930s but immensely complicates the current situation. The situation has been further aggravated by the haphazard and arbitrary way in which it was handled by the Bush administration. The public and the business community suffered a shock in the aftermath of the Lehman Brothers default, and the economy has fallen off a cliff. The next two quarters will show rapid deterioration.

[Warpy]

1. The way to avoid bubbles, boom and bust cycles

is to keep vast wealth out of the hands of people like Soros and recirculate it at the bottom into the hands of productive workers.

Oh, Soros is a smart man and will continue to get richer over time, albeit much more slowly, so don't weep for him.

However, the economy runs from the bottom up, something he's still missing, and the top needs to be prodded by taxation into doing what they should be doing all along: providing seed money for domestic enterprise.

Face it, this isn't a credit or liquidity or derivative or bubble crisis. This is a crisis of too few jobs paying too little money to keep our economy alive.

Who would have defaulted on his mortgage had he been paid enough to keep a roof over his head?

[ww2player]

2. get rid of the FEDERAL RESERVE

and the fiat money system. That would be the best first step at preventing these problems. Then make the congressmen/Thieving Bastards and their buddies pay off the trillions in debt that they have created. Not our future Great Great Grandkids!!

[cottonseed]

3. That or tax to hell out of those at the top marginal tax rate...

The Fed can loan as much as they want, but if finance and obscene wealth can be captured and injected directly through the system we'd be back around where we were in the 50's and 60's where at least it seemed a lot of folks had nice middle class salaries.