It is clear that the world is undergoing a major deflation, after years of priming the pump to inflate the global economy beyond its ability to absorb, given the current level of technology that we have.
We now have a monstrosity in our hands, the trillions of dollars that are now sloshing around the global financial markets looking for a safe home to hide. These short-term capital flights looking for high returns are the product of money printing by irresponsible central banks around the world led by the US Fed which now has a moral dilemma of how to stop printing the cash and not be blamed for the ensuing deflation. The implosion of the global economy is a natural consequences of years of excessive liquidity which has left stock prices high (and refusing to crash), real estate prices way beyond the reach of ordinary working people (and still refusing to crash), banks with loans heavily loaded on stock and shares and real estate lendings (and still refusing to crash).
The ensuing deflation and depression are the natural outcomes of decades of money printing which central bankers should have seen in the first place, but instead had argued with breathtaking profundity of how they are saving the world economy and triggering off the ICT revolution when no one is asked to do real work.
So the policy wisdom is now how to prevent deflation and depression so that we do not trigger off a third world war (which probably is already happening with madmen with cash getting hold of weapons of mass destruction now for real). It is still this thinking of a loose monetary policy that is taking hold of the minds of so-called wise central bankers who did nothing but to subject the real economy to the vagaries of global tidal waves.
For sure the argument is not a credit squeeze which would basically lock everybody out of the banking system, but for a series of bold steps to raise interest rates especially deposit rates to encourage savers, curb consumption and challenge the capitalists to come up with ideas and schemes with a decent rate of return.
The capitalists probably now have so much real estate that is going to last them many lifetimes. But of course there is excess capacity in real estate with building left unoccupied because those who need housing do not have access to shelter.
It is an unthinking capitalist who imagines that the only way the world is going to grow and prosper is to have an evergrowing population that is going to do all the hardwork to obtain decent returns for the capital of capitalists. We know this to be the mere extraction of surplus value of labour. There is no reason why just having money or property is going to make not having to labour in their lives.
There were two world wars where significant portions of the world population were killed. But the aftermath were economic boom because everybody who were left alive were galvanised as a society to work to survive and live.
It is disheartening to read in modern day Japan that young people are being taken advantage of by companies which forced people to work inhumanly long hours with wages that no human beings can live on and when workers are forced to take their own lives as the only way out of their predicament.
Japan has failed as a national economy because the government and the corporate sector collude to steal resources from the people by printing money, currency depreciation, inducing inflation, underpaying wages and with the government and the people going into debt which eventually must be paid by the younger generations. In the meantime, the Japan companies go global to seek better returns overseas and leave the kids at home to fend for themselves by working their butts off for some food in their stomachs and nowhere to go.
It is quite alarming that youth unemployment has grown to 25% and 50% for most economies, advanced or not. There seems to be a real disconnect in the globalised economy where a handful of people can earn more than several nations can in a year and that so-called wealth is not sufficiently spread around by bankers. Bankers are doing an appalling job allocating financial resources, preferring to build cities of ever-growing densities ostensibly to create better economies of scale and "fuel efficiency" centred around casino-type activities.
Governments who measure the libido of their economies by the index of their respective stock market are probably the most corrupt, for these politicians are probably managing their personal fortunes in the markets with projects they are pushing. Everybody are in it to suck the life juices of the ordinary people through all kinds of asset play.
There really is a need for bankers and the financial market to sit down quietly and analyse the economy and decide on the directions of their loans and nuture the current generation of young people who are dying for a toe-hold into the unreal world of the economic matrix.