Sunday, January 27, 2008
Global Economic Crisis
The pessimists will say that we are headed for one, and that it is not the result of the bust of the housing market but more an endemic problem with our overall economic system. Mostly that it has allowed financial interests to be in control, unchecked and unregulated for too long. Is that really a surprise? Those with money, knowledge, and the will to move the world in a direction favorable to their interests and philosophies will easily win. The danger is that we are doomed to repeat our past mistakes, that people living today are too far removed from the last great financial crisis. That we have forgotten the lessons we were supposed to have learned. What worries me is to hear the managing director of the International Monetary Fund and the head of the Federal Reserve speak of possibly using Keynesian economic policies, a school of thought generally rejected by such high ranking financial experts. They must have a terrible outlook to recommend, what is to them no doubt, desperate initiatives. Luckily we are not without hope, a smarter Federal Reserve will have no fear of using expansionary monetary policies, and policy makers in governments all over the world have options. The best may be to dust off their old textbooks on Keynesian economic philosophy, and work towards strengthening their own spending bases, to make sure developed countries each have a strong middle class with a will and an ability to participate in a global economy.