Aussie economist Steve Keen, host of the excellent Debt Deflation blog, has long argued that our current – record high – debt-to-gdp ratios are the real cause of the crisis. As the debt is still there, the crisis is still here. He offers a realistic assessment of our options –
Having got ourselves into a debt-induced economic crisis, the only permanent way out is to reduce the debt–either directly by abolishing large slabs of it, or indirectly by inflating it away. I have very little confidence in the ability of the Federal Reserve to do the latter, while the former will take a level of political fortitude that is far beyond our current politicians.
And channels Michael Hudson’s maxim “Debts that can’t be repaid, won’t be repaid”.
Indeed. My thoughts exactly, when commenting on a housing rescue proposal on Progressive Economy.
Read the whole article here – Naked Capitalism and My Scary Minsky Model