Free markets are not to be blamed for the Great Recession. On the contrary, its origins rest upon the deep government and central bank intervention in the economy. Banks break the link between savings and investment, through the use of modern fractional reserve banking. At the end, this artifical new money created by banks creates distortions in the markets. Additional market manipilation is created by banks through the supression of of interest rates, bailouts and derivatives. This money is driven away from productive uses into capital goods that add little value to our economy. Thus, this distortion that is created can not last forever and must self correct and be liquidate all the mal-investments created during the boom. The is one of the main reasons for the current great recession.
The current solution to our liquidity crisis is to add additional debt into the economy to fix the unemployement problem. This only pushes the “can” down the road as it temporary releves the pain and will only worsen the financial problems. As we have seen the reaction in much of the world today is for the taxpayer to pay for the mistakes the central banks have created. The ECB, FED, PBOC, BOE are all printing money, thus creating new money to help save the banks. This new money in the system creates inflation and destroyes the purchasing power of the currency.
This video is a must watch for anyone seeking to learn the real reasons for our current financial crisis and in particular the Spanish economic crisis. For other economic “truth” documentaries see here..