tag:blogger.com,1999:blog-7238065871527577968.post3741437434019606742..comments2023-04-07T04:37:37.374-07:00Comments on Sojka's Call: Recession Coming?Sojka's Callhttp://www.blogger.com/profile/18194255866195398776noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-7238065871527577968.post-58184015953481577412012-02-16T18:59:11.893-08:002012-02-16T18:59:11.893-08:00Over at Mish's Global Economic Trend Analysis ...Over at Mish's Global Economic Trend Analysis blog he posted excerpts from this article as well and summed it up thusly... <br><i>Debt Stimulates Until The Collapse<br /><br />Lacy Hunt makes a stunningly good case why adding on more Keynesian stimulus is doomed to failure. Should Bernanke actually succeed at creating inflation, interest on the national debt would crucify us all.<br /><br />Please note the references to 100% backed money. Recently, there has been a number of seriously misguided articles on how the gold standard failed to prevent depressions prior to 1929. Such articles fail to point out that fractional reserve lending which allows extending more credit and making more loans than there is money is the culprit. The solution is 100% gold-baked money and the end of fractional reserve lending.<br /><br />Fisher and Hunt have this correct, as do the Austrian economists.<br /><br />Unfortunately, in their inflation predictions, most of the Austrian economists only consider money supply and not the collapse in credit and the value of that credit on the books of banks. This led to galling bragging by Keynesian economists who are likewise clueless about what is really happening and why.<br /><br />Simply put, what cannot be paid back won't, debt will collapse back to a more sustainable level, and benefit promises that people expect will be reneged on, just as is happening in Europe today.<br /><br />This process is the debt deflation cycle I have talked about at length for years.</i><br /><br />Mike "Mish" Shedlock<br />http://globaleconomicanalysis.blogspot.comSojka's Callhttps://www.blogger.com/profile/18194255866195398776noreply@blogger.com