Joseph A. Schumpeter said of the consumer crisis in his 1939 book Business Cycles: “Consumers’ borrowing is one of the most conspicuous danger points in the secondary phenomena of prosperity, and consumers’ debts are among the most conspicuous weak spots in recession and depression... the load of debt thus light heartedly incurred by people who foresaw nothing but booms should become a serious matter whenever incomes fell. Nothing is so likely to produce cumulative depressive processes as such commitments of a vast number of households to an overhead financed to a great extent by commercial banks.”
That is so amazing.
Ludwig Von Mises also foresaw all of what we face because he too lived through the Great Depression as well as the rise of Hitler after the Weimar Republic did exactly what Obama and Bernanke are doing now............here is what he said about credit expansion.........
“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
“The credit expansion boom is built on the sands of banknotes and deposits. It must collapse.
“The boom is called good business, prosperity, and upswing. Its unavoidable aftermath, the readjustment of conditions to the real data of the market, is called crisis, slump, bad business, depression.
“The boom squanders through malinvestment scarce factors of production and reduces the stock available through overconsumption; its alleged blessings are paid for by impoverishment.
“The boom produces impoverishment. But still more disastrous are its moral ravages. It makes people despondent and dispirited. The more optimistic they were under the illusory prosperity of the boom, the greater is their despair and their feeling of frustration. The individual is always ready to ascribe his good luck to his own efficiency and to take it as a well-deserved reward for his talent, application, and probity. But reverses of fortune he always charges to other people, and most of all to the absurdity of social and political institutions. He does not blame the authorities for having fostered the boom. He reviles them for the inevitable collapse. In the opinion of the public, more inflation and more credit expansion are the only remedy against the evils which inflation and credit expansion have brought about.
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“The whole system is the acme of the short-run principle.