Today in response to some of the news posts I put out on Twitter, someone replied:
then if people stop spending the economy will slow, there's really no easy solution.I would suggest that until we properly address and understand the problem there can be no solution. A solution can not be implemented unless we know, precisely, what we are trying to solve. A solution must set goals of what the solution is trying to achieve.
Today's so called solutions don't clearly spell out the problem they are trying to solve, nor clearly explain the problems present. Generalized goals such as "jobs", "housing value", etc are simply functions of a larger whole which is not being addressed.
I've always tried to be honest about what a real solution would entail. The solution of course is based on the understanding of a systemic problem and the goal of getting rid of this fraud and fake growth. It means from our current point of view that a large portion of the economy must essentially collapse, but the flip side of this coin is it's going to collapse anyway. This fact should be becoming quite apparent as ever increasing amounts of stimulus are pumped in to the economy with really very little return (or negative return really) on the investment.
The problem we need to solve is, "how do we properly manage and control this collapse with minimal destruction?". If you believe that the economy can return to what we've come to know prior to 2008 as 'normal' even in face of problems such as peak oil and multiple generations of debt servitude without even considering the costs the generation paying this debt will itself require then you are being naive.
Canada will very soon be joining the reality the rest of the world deals with and I post about everyday. The worst is yet to come and as such my suggestion is prepare for the worst as the time for discussion and implementation of large-scale solutions is far past now. Back in April, few people wanted to take our debt and housing problem seriously but now expect it to dominate our headlines along with Chinese espionage and continually dismal returns on resource development as prices sky-rocket due to infinite quantitative easing.
If the problem we're trying to solve is "how do we make things like they were before 2008?" - there is no solution. That era of growth was largely based on fraud, it's never coming back. We can either look forward and seriously decide what sort of system we do want, or we can claw on to the revisionist history of returns seemingly coming out of thin air. They were, so what are we going to do about it?
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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading.