FAST FIVE: No Recession Ever Again? The Yellowstone Analogy

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The Yellowstone Analogy Authored by Charles Hugh Smith via OfTwoMinds blog, Just as forestry management's policy of suppressing forest fires insured uncontrollable conflagrations, so central banks' attempts to eliminate recessions insure a financial conflagration that will burn down the entire global financial system.

Neoliberal global capitalism has one unstated law: credit must always expand or the system dies. The rate of credit expansion can increase or decrease but it must continue expanding forever.

Instead of letting the dead wood burn, the system props up zombie corporations and banks that would be destroyed if credit wasn't “free.” The zombie banks and businesses–the equivalent of dead but still-standing trees–are the perfect tinder for a fast-spreading conflagration that burns everything to cinders.

You can't make people and enterprises with little real collateral creditworthy.

Now that we're approaching a worker-retiree ratio of 2.5-to-1, the system cannot possibly pay the benefits promised without borrowing trillions of dollars each and every year–and from whom.

Categories: ZH