How to Have a Financial Collapse

It’s easy. Get rid of the regulations that keep the banks from doing insane stuff. It’s easy, and Trump is getting underway with that very action. The process is simple. It’s known as the Minsky Cycle, which is then followed by the Fisher Cycle. The Minsky Cycle describes how things get completely out of hand and, in the middle of a euphoric bacchanal brought on by deregulation and speculation, a moment arrives at which investors panic and the economy collapses. At that point, the Fisher Cycle describes the resulting depression and how it persists in spite of efforts by the government to make things better.

The sad thing is that while those two cycles are some of the most accurate models to emerge from modern economics, they fly in the face of the grand beliefs of the neoliberal economists that believe only free trade and the gold-plated anarchy of deregulation will save the world. Since those neoliberals are also running the world’s major private banks as well as the central banks, they’re always promoting policies to further their ideological views, even when those views always end in tears. Their battle cry is “This time is different!” as they pilot financial machines toward the abyss.

That President Trump has chosen a Goldman Sachs banker for his treasury secretary came as no surprise to me. His speed in junking banking regulations, as well, is no surprise. With markets at all-time highs and debt structures in Europe ready to collapse, the ensuing financial collapse will also be no surprise.

Protip: If you want to make a nation great, keep its banks on a tight leash. Letting them run free never ends well.

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