Since 1968 when we first borrowed $1 for each $1 of GDP growth it has gotten worse.

Nov.12, 2008 in Market Outlook

Using Government inflation figures to adjust GDP we have been borrowing, now, $5 for each $1 of growth. From 1968 on it got worse each decade. If you use Shadow Statistic’s inflation figures, we have already been negative for all but one quarter in the last 8 years. Now even with government figures we are negative. If Shadow stats is close to correct, we could be to the point where no matter how much we borrow, we can’t create growth any more.

Even now, they are not addressing the core problem of a flawed monetary and economic policy because banking needs fractional banking and interest to make their profits as high as they have been. Not just here but, globally, this system has been in place. Too complex to really cover here but, they need to go back to ground zero and adopt new monetary policies.

The fear is that the global leaders and this G-20 meeting will want to do just that and limit the banks ability to scam the system. It isn’t a high probability they will actually limit the banks but, we should know in the coming weeks and there is a good chance we won’t like what they do even if it is needed. As a matter of fact, doing what is needed, reforms, would actually make things worse first before they started to get better because it would limit banking and debt and lending and thus, expansion based on debt like we have been doing for decades.

We would be forced to assume more responsible spending limits. Cities, states, corporations and the federal government plus consumers. It is the consumer that will really hit the economy if he either can’t borrow or doesn’t want to and instead wants to save and pay down debt and have a “rainy day,” fund. There is no painless way out of this. But, we can do some delaying tactics and we can make it worse.

Did you like this? If so, please bookmark it,