You know things are getting grim when sophisticated economists writing in the Financial Times begin contemplating Biblical solutions. Here we have Willem Buiter, who ably relates the general failure of governmental policies since the Crash, and concludes by proposing a Jubilee on household debt.
The essay is quite technical at times. Parts of it go over my head. But the gist of it is that thrift has come back in a major way. The usefulness of debt as an instrument of finance has vanished, and households around the Western world and beyond now favor savings over consumption so dramatically that no tool of governmental policy so far applied can counteract it.
Meanwhile, the vast interventions by governments in the banking and non-bank finance industries have insured that big corporations have access to capital (much of it government-backed), but smaller businesses are rigidly fettered. Credit lines are disappearing; banks are exceedingly cautious; consumers even more so. Governments and central banks may have managed to rescue the financial system; but they have done little to alleviate the deeper structural problems of the economy as a whole.
In a word, the Usury Crisis continues apace, and few in positions of authority dare face it.
The road not traveled, intellectually, is the one where savings is recognized as at base a healthy response to the exuberance of usury that has sown such ruin. We have answered a crisis brought on by excessive debt with yet more debt. The Keynesians have already begin to call for more. The frozen rigidity of their thinking is remarkable. They talk like it is 1932.
But Buiter with his half-facetious steps toward a vast cancellation of usurious debt, biblical in scope, may be signifying some breaking of the ice. Maybe.