If you're living this experience right now in an area hard hit, you'll be interested to know what the International Monetary Fund (IMF) had to say. On Apr. 9, 2008, the IMF warned of a danger that the U.S. recession could become a depression. Nine months later, this February, it noted that the "Advanced economies are already in a depression."
The program to avert a prolonged depression consists of massive infusions of money into the private banks. The recipient banks are, of course, the very same institutions and executives who brought us this economic catastrophe.
So right now, citizens are holding the bag for the money given to the banks, while the banks have no obligation to tell anyone where a majority of this money went or even to repay it.
The banks were expected to take our money via the federal government and create credit opportunities for citizens, credit that would boost the economy. Instead, they took the money and created much tighter credit. As a result, the dollars needed to save citizens from the suffering caused by a depression are not available for that purpose.
Even though citizens will see no benefit in the bank welfare program, they are allowed to anticipate years of economic hardship in order to pay for it. We are currently held hostage by false assumptions about the supposedly inevitable decline of the economy and the suffering that must follow. The most damaging assumption is that the public has to bail out private banks for losses due to massive negligence (at least) leading to their insolvency.
We have become indentured servants working to prop up a comatose financial system and the banks that crated this crisis in the first place.
Does it have to be this way?
The United States has the most productive workforce in the world, thirteen of the top twenty research universities anywhere, and plentiful natural resources. We can feed our selves reasonably well, provide health care for everyone if we choose, and address educational needs when they are recognized. In addition, we're located between two very friendly countries and populations. That constitutes real wealth.
The nation and people possess everything needed to address the current financial crisis except one seemingly vital element, dollars. We lack the dollars in both the private and public sector to support needed public initiatives and the requirements of business. Citizens also lack the dollars to spend on essentials and non essentials, a critical step in bring the economy back to some semblance of stability.
What are the banks doing with all those dollars they've received from us? First, they won't tell us because they don't have to for all but the most recent $750 billion gift. Second, they're in no hurry to make those dollars available for productive purposes. It raises a legitimate question. Do the banks even have this money anymore?
The suffering awaiting the ongoing economic collapse is guaranteed as long as we have faith in the necessity of preserving the current financial system and the assumption that underlies it: we need to pay the debt for what they spent and lost.
Why should we?
We have businesses, small and large, which meet important needs and provide services that are of value. We have citizens and organizations that want to acquire those goods and services. Paying the debt for financial institutions and investors who will do again what they've already done.
A great national debate should begin on what replaces the system that failed so miserably and it needs to start with the masses of people who actually do the work that produce our nation's true wealth. .
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