The global economy could face a “relapse” of the crisis that rocked the world a decade ago, the Bank of International Settlements (BIS) warned in its annual report on Sunday, stressing that there would not be enough “medicine” available to treat the problem this time, AFP reported.
“Things look rather fragile,” BIS chief economist Claudio Borio told reporters. “There is little left in the medicine chest to nurse the patient back to health or care for him in case of a relapse.”
The Basel-based BIS, which is the central bank for central banks, said the recovery after the 2007-2008 global financial crisis had been “highly unbalanced,” with emerging economies especially under pressure.
Borio said central banks around the world had for years been administering “powerful medicine” to alleviate the crisis in the form of “unusually and persistently low interest rates.” He said this had helped boost economic activity, “but some side effects were inevitable.”
As an example, he highlighted the crises that have recently emerged in Turkey and Argentina, which he said are “withdrawal symptoms” resulting from the central banks lowering the dosage.
After years of highly accommodating monetary policy, the US Federal Reserve has begun raising interest rates and the European Central Bank (ECB) said it will end its stimulus program at the end of 2018.
So lets try and envisage what could happen should the world economy deflate.
Primary concern would be the strength of the US dollar. Should it fail to hold its status as the world’s strongest currency then its collapse would trigger unprecedented financial catastrophe as that probably not seen since the collapse of the western Roman empire in the 5th century and with gold going into hiding for a thousand years. This lack of shining metal gave that millennium the ominous title of the Dark Ages and not until the Italian Renaissance and the introduction of the engagement ring did gold really come out of hiding. Then with the banking system that evolved involving a form of Real Bills coupled with the amazing double entry book keeping method did the wealth return. Adam Smith used this Italian model in his thesis The Wealth of Nations which purports to show that a gold standard only works when there is an emphasis on Discount and not Interest as the best method for accruing capital. This was the system that produced the Victorian British Empire, the greatest collection of wealth ever and resulting in the blossoming of science and its benefits only to be destroyed by vested interests in 1913 by allowing banks to forever list some liabilities as assets.
This implies that gold and Real Bills must be central to any attempt to reinvigorate the global economy should it falter. The problem was always the 1971 disengagement of gold at the Bretton Woods debacle and the advancement of fiat currencies which allowed for the theft of wealth from the general population through inflation. This game of monopoly must be restarted by calling a debt Jubilee and also replenishing the peoples funds through a program of selling all government properties for gold and silver and sharing the proceeds equally with all citizens. As land is the basis of all wealth then where ever people live the ownership of that abode must be equally transferred to all its inhabitants. Only then can the game be restarted.
see http://www.cashramspam.com and http://www.primaryfundamentalright.org/index.php?pageName=pfrWhatIs for more explanation.