Question: Can you describe the financial crisis in a way that even Kevin Malone from The Office could understand?
Answer: Okay, Kevin. You don’t give a narcotics addict more narcotics in order to feel better, or to recover. Over the past decade, the economy became even more finance and consumption-based. We stopped saving as a nation.
True economic growth is based on making actual stuff (manufacturing) and not finance-oriented. Heck, even General Motors became a finance company in drag, as it outsourced much of its auto manufacturing.
Our policymakers thought they could use monetary policy to keep us from recession. We’ve been borrowing and spending like there’s no tomorrow. Well, tomorrow is now today. Recession is not a bad word in most economies. It is a natural part of the business cycle. And most of them only last a year if they’re allowed to run their course. Not this one. But, this, too, shall pass.
