"Our Economy is not efficient because it produces a lot of stuff. It's efficient because it satisfies our needs", argues Joseph Heath in The Efficient Society.
A year ago, Knight Kiplinger published in his Kiplinger Letter that over the long run it was a good thing for the economy that customers were pulling back. While recovery would come slowly, there would be healthier growth, and a strong economy, less dependent on borrowed money.
I tend to agree with that assessment. The main problem in Western World economies today is not the rate of consumption, it is the lack of jobs. People are learning to spend money on their basic needs, cutting back on using credit cards and home equity loans (unheard of in Europe), then reducing debt.
In his award-winning video, The Money Masters, Bill Still makes the following assessment: “since 1864 we had debt-based banking system, all our money is based on Government Debt, and we can’t extinguish Government Debt without extinguishing our money supply.”
Of course some people would like to see another bubble, another way to make millions fast, but those people are not the ones suffering today by the collapse of the financial system, nor the ones losing their homes because they can’t afford paying for them.
The Federal Reserve was lowering interest rates and the banks printing money. Sounds strange, but that is the real scenario, Banks were increasing the amount of money circulating, with low interest loans and selling their “bad” mortgages all over the world. It worked for them, especially for their highly paid executives collecting millionaire bonuses as people suffer to pay their bills on time.
But it is time for financial responsibility, for the banks, the governments and especially for the people. As Pope Pius XI said in his encyclical, Quadragesimo Anno (5/15/1931):
For what will it profit men to become expert in more wisely using their wealth, even to gaining the whole world, if thereby they suffer the loss of their souls? What will it profit to teach them sound principles of economic life if in unbridled and sordid greed they let themselves be swept away by their passion for property, so that hearing the commandments of the Lord they do all things contrary.